Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

London County Council (Money) Bill,

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, referred on the First Reading thereof, the Standing Orders, which are applicable thereto, have been complied with, namely:

London County Council (Money) Bill.

Bill to be read a Second time.

Provisional Order Bills (Standing Orders applicable thereto complied with),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, referred on the First Reading thereof, the Standing Orders, which are applicable thereto, have been complied with, namely:

Ministry of Health Provisional Orders (Ashby-de-la-Zouch and Slough) Bill.

Ministry of Health Provisional Orders (Aylesbury, Chesham, and Guildford) Bill.

Ministry of Health Provisional Order (Hexham) Bill.

Bills to be read a Second time To-morrow.

Provisional Order Bills (No Standing Orders applicable),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, referred on the First Reading thereof, no Standing Orders are applicable, namely:

Ministry of Health Provisional Orders (Brentford and Chiswick and Ramsgate) Bill.

Ministry of Health Provisional Orders (Chippenham and Grimsby) Bill.

Bills to be read a Second time To-morrow.

Barnsley and District Traction Bill [Lords],

Birkenhead Corporation Bill [Lords],

Clacton-on-Sea Pier Bill [Lords] (Certified Bill),

East Kent District Water Bill [Lords] (Certified Bill),

Faversham Oyster Fishery Company Bill [Lords],

Lancaster Corporation Bill [Lords],

Portsmouth Water Bill [Lords] (Certified Bill),

Sutton Coldfield Corporation Bill [Lords],

Read a Second time, and committed.

BRADFORD CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL,

"to confirm a Provisional Order made by the Minister of Transport under the Bradford Corporation Act, 1910, relating to Bradford Corporation Trolley Vehicles," presented by Mr. Herbert Morrison; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 183.]

Oral Answers to Questions — SCOTLAND.

HARBOURS.

Major Sir ARCHIBALD SINCLAIR: 1.
asked the Secretary of State for Scotland if he is yet in a position to make any statement with regard to his plans for the repair of small harbours round the Scottish coast?

The SECRETARY of STATE for SCOTLAND (Mr. William Adamson): The small harbours and piers round the coast of Scotland which are not primarily fishery harbours present special problems of some difficulty. As the hon. and gallant Member will appreciate, prior consideration has had to be given to the important fishery harbours, but the problem of dealing with the small harbours and piers is being considered and will be specially reported upon—I trust at an early date.

Sir A. SINCLAIR: Can the right hon. Gentleman say what form the report will take? Will it be a White Paper, or will it be necessary to put down another question?

Mr. ADAMSON: I shall be glad if the hon. and gallant Member will put down another question.

AGRICULTURAL CREDITS.

Sir A. SINCLAIR: 2.
asked the Secretary of State for Scotland whether he is yet in a position to state when Part I of the Agricultural Credits (Scotland) Act, 1929, will be brought into operation?

Mr. W. ADAMSON: I would refer the hon. and gallant Member to my reply of 29th April to the hon. and gallant Member for Banff (Major Wood).

Sir A. SINCLAIR: Surely, we can have some decision on this vitally important question soon? If the banks will not support the right hon. Gentleman, is it not possible for his own Government to come forward and finance this scheme? Is he not aware that it is urgently required in Scotland?

Mr. ADAMSON: I can assure the hon. and gallant Member that I am just as anxious as he is that the matter should be disposed of, and I have tried more than one source.

Mr. SKELTON: Will the right hon. Gentleman undertake, if the banks will not assist, to bring in an alternative scheme at an early date?

Mr. ADAMSON: I can assure my hon. Friend that I have tried all that I can.

Sir A. SINCLAIR: Can the right hon. Gentleman say when it is likely that we shall have any news in regard to this matter, because it is a matter of great importance to Scotland?

Mr. SKELTON: Are we to understand that the alternative schemes have also broken down?

Mr. ADAMSON: I have already said so.

LAND SETTLEMENT.

Sir A. SINCLAIR: 3.
asked the Secretary of State for Scotland how many unsatisfied applicants for small holdings are on the lists of the Department of Agricul-
ture at the present moment; how much money was spent upon land settlement in Scotland during the year 1929–30; and how much will be available for that purpose during the present year?

Mr. W. ADAMSON: The number of unsatisfied applicants for small holdings is 4,045. The expenditure on land settlement in Scotland in the year 1929–30, including the repayment of loans to the Public Works Loan Commission under the Land Settlement (Scotland) Act, 1919, was £342,816. The monies available for similar services in the current year amount to approximately £466,000.

POOR LAW RELIEF.

Mr. MACLEAN: 4.
asked the Secretary of State for Scotland the town or district in Scotland which has the largest number per 10,000 of its population in receipt of Poor Law relief?

The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Johnston): According to returns received by the Department of Health for Scotland as at 15th April, the parish with the largest number of persons in receipt of poor relief per 10,000 of population was Campbeltown, where the rate was 836.

FISHING INDUSTRY.

Mr. DUNCAN MILLAR: 6.
asked the Secretary of State for Scotland whether he is aware that, owing to the number of herring drifters and other fishing boats which have been condemned by the Board of Trade as unseaworthy at various fishing ports in Scotland, and to the unsatisfactory condition of many other boats, a number of fishermen are unable to obtain berths during the coming season, and are thus threatened with the loss of their livelihood; and whether, in these circumstances, he is prepared to announce any proposals to assist the fishermen in the replacement of their unseaworthy boats?

Mr. W. ADAMSON: I am not aware that the position is as stated by the hon. and learned Member, and I understand that my right hon. Friend the President of the Board of Trade will in answer to a later question to-day make that point clear.

Mr. MILLAR: Is it not a fact that there are fishermen who are unable to
obtain berths this season, and is it not desirable that some effort should be made to provide boats for these men?

Mr. ADAMSON: I cannot add very much to the reply that I have already given. We have been making inquiries, and we understand that there are very few fishermen who will be unable to obtain berths during the coming season.

Mr. MILLAR: May I supply the right hon. Gentleman with information which I have received, to the effect that there is quite a number of fishermen who will not be able to obtain berths for this season; and will he look into the matter?

Mr. ADAMSON: If the hon. and learned Member has any information to convey, I shall be very glad to have it.

Sir A. SINCLAIR: Will the right hon. Gentleman consult the recent Reports of the Fishery Board, in which he will find attention drawn more than once in recent years to the need for the replacement of boats?

Mr. ADAMSON: We are speaking of the coming season, not of recent years.

Mr. MILLAR: 38.
asked the President of the Board of Trade the number of herring drifters and other fishing boats which have been condemned by the Board of Trade as unseaworthy at Scottish fishing ports during the past 12 months, giving the numbers and classes of vessels condemned at each port?

The PRESIDENT of the BOARD of TRADE (Mr. William Graham): No herring drifters or other fishing vessels in Scottish fishing ports have been condemned by the Board of Trade as unseaworthy during the past 12 months. It must not be understood from this statement, however, that the surveyors in Scotland have been inactive in calling attention to defects in fishing vessels in the ordinary course of their duties; the Board, of course, only take action which might be described as "condemning a vessel as unseaworthy" if the defects are not remedied after notification by their officers.

Mr. MILLAR: Can the right hon. Gentleman give the number of boats which are in a defective condition and to which the officers have called attention as being in a defective condition at the present time?

Mr. GRAHAM: No, I could not give the exact number without notice. If the hon. and learned Gentleman will put down a question, I will do my best to get the information.

Mr. MILLAR: 53.
asked the Prime Minister when the Civil Research Committee on Fisheries intend to take evidence regarding the condition of the Scottish fisheries; whether they propose to hear the Scottish evidence in Scotland; and what provision has been made for meeting the expenses, etc., of witnesses coming from a distance?

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): A considerable volume of evidence in regard to Scottish fisheries has already been taken by the Committee, and I understand that further evidence on this subject will be taken this month. The answer to the second part of the question is in the negative; as regards the third part, approved expenditure will be met from Sub-head B 2 of the Treasury Vote.

Mr. MILLAR: Do I understand that the right hon. Gentleman has not arranged that Scottish evidence should be taken in Scotland, where a substantial body of witnesses desire to be heard?

Mr. SNOWDEN: It would be very difficult for a committee of this kind to go gallivanting about the country, and it would be much more convenient for the witnesses to be heard here.

FOREST WORKERS (WAGES).

Mr. MACLEAN: 43.
asked the Parliamentary Secretary to the Board of Trade, as representing the Forestry Commissioners, the normal minimum weekly wage paid to male forest workers in their employ in Scotland?

Mr. ALPASS: I have been asked to reply. There is no normal minimum wage in Scotland. The average weekly wage paid by the Forestry Commissioners to adult male regular forest workers in their employ in Scotland is 40s. 6d.

Oral Answers to Questions — TRADE AND COMMERCE.

COPPER.

Mr. DAY: 12.
asked the President of the Board of Trade the stocks of copper in public warehouses in the United Kingdom as at the 30th December, 1929;
has he any information that will show the extent to which the production of copper is under either British or foreign control; and will he give particulars?

Mr. W. GRAHAM: I would refer my hon. Friend to the information on this subject which I gave in the House on 15th April.

Mr. DAY: Do the Government propose to encourage copper smelting in Great Britain?

Mr. GRAHAM: I cannot reply to that question off-hand, but it is certainly under consideration.

MOTOR, CAR IMPORT DUTIES, FRANCE.

Sir ASSHETON POWNALL: 13.
asked the President of the Board of Trade whether his attention has been called to recent increases in the duties on British motor cars entering France; and whether he will make representations with regard thereto?

Mr. W. GRAHAM: Particulars of the new French import duties on motor cars were published in the Board of Trade Journal of 1st May. These duties are on a specific basis, whilst the former rates were ad valorem. I cannot say how far the new system involves any increase of duty on typical British cars, and I have not been approached on the subject by British manufacturers, though particulars were published in January of the rates then under consideration, and these were on the whole higher. The question of representations to the French Government has not, therefore, arisen.

Sir A. POWNALL: Can the right hon. Gentleman say what bearing these altered duties have on the suggested Tariff Truce?

Mr. GRAHAM: Yes. These duties come within the category of proposals prior to the 24th March, and, in fact, they were specifically excluded in the Debate at Geneva.

Sir KINGSLEY WOOD: Does not the right hon. Gentleman think that he had better forget all about the Tariff Truce in his own interest?

Mr. GRAHAM: No; on the contrary, I think it ought to be very carefully remembered.

Captain PETER MACDONALD: Is it not a fact that these duties which have been imposed by various Governments were precipitated by the Tariff Truce proposals?

HERRINGS (EXPORTS TO RUSSIA).

Viscount ELMLEY: 14.
asked the President of the Board of Trade how many barrels of herrings were exported to Russia in 1928 and 1929, respectively; and whether this amount for 1929 is likely to be increased this year?

Mr. W. GRAHAM: The exports of herrings registered as consigned to the Soviet Union (Russia) during the years 1928 and 1929 amounted to 104,200 cwts. and 33,000 cwts. respectively. During the first three months of this year the quantity exported (182,300 cwts.) has already exceeded that recorded for either of those complete years. It is believed that the quantities consigned direct to the Soviet Union do not represent the whole of the herrings from the United Kingdom that reach that country.

RUSSIAN COTTON GOODS (IMPORTS).

Mr. HACKING: 15.
asked the President of the Board of Trade whether he has any information to give the House regarding imports into this country from Russia of cotton yarn and manufactured piece goods?

Mr. W. GRAHAM: The total declared value of cotton yarns and cotton piece goods imported into Great Britain and Northern Ireland and registered as consigned from the Soviet Union (Russia) during the year 1928 amounted to £1,188. No such imports were registered during the year 1929 or during the three months ended 31st March, 1930.

Mr. HACKING: Is the right hon. Gentleman quite satisfied that he has full knowledge of all the goods that are imported into this country from Russia?

Mr. GRAHAM: Yes. That has been raised before. I have made inquiries through Hamburg, Warsaw, and I think other centres, and I can trace no other imports.

CEMENT.

Major GLYN: 17.
asked the President of the Board of Trade what is the average manufacturing cost of a ton of
cement in the United Kingdom, the United States of America and in Italy: and what is the average retail price?

Mr. W. GRAHAM: I regret that the information asked for in the first part of the question is not available. As the answer to the second part involves a number of figures, I propose, with the hon. and gallant Member's permission, to circulate it in the OFFICIAL REPORT.

The following is the answer:

The price per ton of cement in the countries specified at recent dates was as follows:

United Kingdom (as quoted in "The Builder," March, 1930):

Best Portland cement, British Standard specification, £2 6s. to £2 8s. per ton delivered in London area in full van loads; £1 19s. per ton alongside at Vauxhall in 80 ton lots.

United States (as reported by the United States Department of Labour, January, 1930):

Portland cement, average price of six works, f.o.b., ex plant, £1 18s. 8d. per ton.

Italy (as quoted in the "Bulletin of Prices," issued by the Central Statistical Office, Italy, 1st March, 1930):

Artificial cement, average of the lower and higher figures of the ranges of prices quoted for deliveries at: Milan, £1 98. 1d. per ton; Naples, £1 16s. 3d. per ton. The prices are ex wagon.

IRON AND STEEL, (IMPORTS).

Mr. ARTHUR MICHAEL SAMUEL: 25.
asked the President of the Board of Trade which month has shown the highest tonnage of imported iron and steel in every form since October, 1927, until April, 1930?

Mr. W. GRAHAM: The imports of goods included in the official classification under the heading "Iron and steel and manufactures thereof," were greater in total weight in October, 1927, than in any subsequent month down to March, 1930, inclusive. The figures for April, 1930, will not be available before the end of this week.

TARIFF TRUCE.

Mr. RAMSBOTHAM: 23.
asked the President of the Board of Trade if coal subsidised for export comes under the provisions of the Convention reached at Berne in connection with the Tariff Truce Conference; and, if so, on what terms?

Mr. W. GRAHAM: The Commercial Convention recently concluded at Geneva contains no provisions relating to subsidies for export; but the Protocol regarding the Programme of Further Negotiations concluded at the same conference includes export bounties and subsidies amongst the questions which are to form the subject of future examination and negotiation.

26. Mr. A. M. SAMUEL: asked the President of the Board of Trade whether the Secretary-General of the League of Nations has notified him of the passage by the German Reichstag of a Bill increasing customs tariffs against Poland whose representative signed the Convention of his Tariff Truce at Geneva on 24th March; and will he state what steps it is proposed to take in view of this proposed breach of the spirit of the Tariff Truce?

Mr. HANNON: 28.
asked the President of the Board of Trade whether his attention has been called to the communiqué issued by the Secretariat of the League of Nations on the subject of the note which the League has received from the Polish Government protesting against projected heavy increases in the German customs tariff applicable to Polish export products; and whether, in view of the Commercial Convention signed at Geneva on 24th March, he will say what action His Majesty's Government proposes to adopt?

Mr. GRAHAM: The Secretary-General of the League of Nations has forwarded to His Majesty's Government a communication to the League by the Polish Government regarding a German Bill providing for an increase in Customs duties, which, they state, has created an entirely new situation as compared with the state of affairs existing at the time when Poland signed the Commercial Convention. Article 2 of the Commercial Convention indicates the procedure to be adopted in cases of this kind by countries who consider their interests to be seriously affected by increases of duty on
the part, of other Contracting States. As the interests of this country are not so affected, His Majesty's Government do not propose to take any action.

Mr. SAMUEL: Does not the right hon. Gentleman see that this is an entirely new state of affairs, and that his artless toying with this tariff truce plaything is making Great Britain appear as a figure of fun in the eyes of the world?

Mr. HANNON: Does not this action on the part of the German Government really mean the complete breakdown of the whole of the Convention?

Mr. GRAHAM: I do not take that view. We should require very much fuller details, and in any case there is no reason to assume at this moment that any representations which will be made will not have effect.

Mr. HANNON: As the whole question of the continuity of this truce is involved, what representations has the right hon. Gentleman made to the German Government with regard to the proposal now before the Reichstag?

Mr. GRAHAM: It is not for us to make representations unless we are directly affected. This is a specific case between two Governments, for which machinery is provided under the Convention.

Sir PHILIP CUNLIFFE-LISTER: Is it not a fact that in spite of the tariff truce, every country except Great Britain and, I think, the Netherlands is free to increase its tariffs, while we are not?

Mr. GRAHAM: It would require a very long reply to answer that. It is certainly not the case.

Mr. HANNON: 29.
asked the President of the Board of Trade whether he will state the precise position of the Government of the United States in relation to the Commercial Convention of Geneva, and if the representative of the United States present at the Tariff Truce Conference gave any intimation of the intention of his Government to make a general increase of import duties in that country?

Mr. GRAHAM: The First Secretary to the American Embassy in Paris was instructed by the United States Government to be present in Geneva for the period of the Conference and to associate
himself with the American Consulate at Geneva with a view to obtaining information regarding the developments of the Conference. The United States Government did not, therefore, participate actively in the Conference, nor were they a party to any of its decisions. The answer to the last part of the question is in the negative.

Mr. HANNON: Was not the reason of the United States representative being present at the Conference to obtain information in order to see how far American tariffs could be raised against the rest of the world?

Mr. GRAHAM: I should not like to say that. America has been represented by observers at many international conferences within recent years.

Mr. HANNON: Is it not a fact that, practically immediately following the Convention being signed, the Tariff Commission of the United States proceeded to submit a scheme for an increase of their tariffs?

Mr. GRAHAM: I should like to look into that. I am strongly of the impression that a revision was already under consideration.

Mr. HANNON: 30.
asked the President of the Board of Trade why certain countries, parties to the Commercial Convention of Geneva, may increase their import duties, without breaking the international treaty, on giving 20 days' notice; and if he will explain why this privilege has not been conferred on Great Britain, the largest industrial country which subscribes to the Convention?

Mr. GRAHAM: The Convention distinguishes between those States which consolidate a substantial proportion of their duties by treaty and those which do not. The majority of European countries fall into the first category, but this country and a few others into the second. Article 1 of the Convention, which in effect prolongs the commercial treaties, would not bind this country not to increase duties, but does to that extent bind the "consolidating" countries. In order to preserve the balance of obligations, it is provided that the "consolidating" countries, so far as their duties are not fixed by treaty, will in general give 20 days' notice of any increase they may make, and enter upon
negotiations with an aggrieved State to restore the balance; while the "non-consolidating" countries, subject to no treaty obligation fixing rates of duty, undertake not to increase protective duties, but may increase their fiscal duties without notice or negotiation.

Mr. HANNON: Did the right hon. Gentleman take any exception to this proposal to give the 20 days' arrangement to consolidated countries while excluding this country to whom an increase of tariff in the interests of industry is of supreme importance in the future?

Mr. GRAHAM: That matter was very fully discussed. I cannot give the details in reply to supplementary questions, but the whole object was to get a balance in these arrangements, and I think that we did that very successfully.

Mr. HANNON: And we suffer by the balance.

Sir P. CUNLIFFE-LISTER: May I ask a question which is susceptible of a simple and short answer? Has this country the same liberty to increase its duties that the Protocol and Convention accords to other countries?

Mr. GRAHAM: I think that would substantially be the case, but we made it perfectly plain that it was not the policy of this country to embark upon Protection at all.

LACE DUTIES, UNITED STATES.

Lieut.-Colonel ACLAND-TROYTE: 35.
asked the President of the Board of Trade if he has any further information about the proposed increase in the duties on lace and lace net imported into the United States of America?

Mr. W. GRAHAM: I am informed that the proposal of the United States Senate to impose specific duties over and above the ad valorem duty of 90 per cent. on narrow lace and on nets and netting has been rescinded in Conference of both Houses of Congress.

Lieut.-Colonel ACLAND-TROYTE: Did the right hon. Gentleman take any steps to bring about this desirable result, or was it entirely due to the French Government being able to threaten to take retaliatory measures?

Mr. GRAHAM: We always, when we are affected, make what representations are possible, but I should not like to enlarge here on any step taken by any other country.

Lieut.-Colonel ACLAND-TROYTE: Will the right hon. Gentleman say whether he did in fact take any steps?

Sir HENRY BETTERTON: Has the right hon. Gentleman made any representations on this matter?

Mr. GRAHAM: I think so, but I should prefer that the hon. Gentleman should give me notice, and I will look into the details.

Lieut.-Colonel ACLAND-TROYTE: Did not the right hon. Gentleman tell us that he would not do anything in this case?

COMPANIES ANNUAL RETURNS.

Sir HENRY CAUTLEY: 40 and 41.
asked the President of the Board of Trade (1) what the legislative authority is by which companies have been permitted by the Board of Trade to escape the penalties incurred by such companies failing to furnish annual reports and balance sheets within the period required by statute;
(2) whether it is owing to shortage of staff that, at the expiration of four months after the date fixed by Act of Parliament, the Board of Trade is still unable to obtain from 600 companies the annual reports and balance sheets specifically required by the Act; and, if it is not owing to shortage of staff, how does he propose to arrange in future to ensure that the public are protected by punctual compliance with the provisions of a law enacted for their protection?

Sir GEORGE HAMILTON: 33.
asked the President of the Board of Trade whether he is aware that 600 companies are still more than four months in default in their obligations to furnish to the Board of Trade annual reports and balance sheets; whether he intends to require compliance with the Act without further delay, or whether he proposes to allow default to continue for longer than four months; and, if so, for what reason?

Mr. W. GRAHAM: As the answer is necessarily very long, I propose to circulate the reply in the OFFICIAL REPORT.

Following is the reply:

The existing arrangements for dealing with companies in default in regard to the filing of their annual return are based upon the provisions of the law under which it is not practicable to compile a complete list of the companies in default in respect of any year until after the end of the following January. When the list has been compiled it is necessary to call the attention of the companies to the default and give them an opportunity of complying with the law. It must also be borne in mind that a large proportion of the companies in default are companies of no general public interest; they include what are practically one-man companies, companies in which all the shares are held by the directors, companies formed to carry on clubs of all kinds, including those of a political, sporting and social character, and moribund companies. In practically none of the cases have complaints been received from shareholders or other persons interested.

The number of companies found in default when the list was compiled has been reduced to about one-fourth, and appropriate steps are being taken, including legal proceedings where necessary, to secure compliance with the Act without delay. I may add that the procedure adopted in the last few months is the same as that followed in past years and as I have already explained, it is based upon the existing state of the law. But I am nevertheless considering whether the system of securing compliance with the law can be improved, and if it appears that such improvement can be secured by obtaining an increase of staff, I will not hesitate to ask for it. It is, of course, open to the shareholders in any case in which they have cause to complain of delay in filing the annual return to take police court proceedings themselves or to bring the matter to the notice of the Board of Trade.

COTTON INDUSTRY.

Mr. HACKING: 48.
asked the Prime Minister whether he is yet able to announce the Government's proposals for dealing with the cotton industry?

Mr. P. SNOWDEN: The Committee are at this moment actively engaged in the consideration of the draft of their Report which the Prime Minister hopes to receive at an early date.

Mr. HACKING: Is the right hon. Gentleman aware that this is Cotton Week, and therefore a fit occasion to make an announcement which would be helpful?

Mr. SNOWDEN: It might have been helpful if the Committee had submitted their Report simultaneously with Cotton Week.

Mr. HAMMERSLEY: When will the Report be made?

IRON AND STEEL INDUSTRY.

Mr. LOUIS SMITH: 50.
asked the Prime Minister whether, in view of the increasing number of unemployed workers in the iron and steel trade, he proposes to take any steps to expedite the Report of the Committee on the iron and steel industry; and by what date their Report is at present expected?

Mr. P. SNOWDEN: I have consulted my Noble Friend, the Lord Chancellor, who hopes to be able to let the Prime Minister have this Report by the end of the month.

Major COLVILLE: Is it the intention of the Government to publish this Report?

Mr. SNOWDEN: I cannot say that.

SCRAP IRON (IMPORTS).

Mr. HARRIS: 70.
asked the Financial Secretary to the Treasury whether he is aware that a large amount of scrap iron has been imported for the first time from France during the last 12 months; that this consists of steel rails supplied by the British Government during the War to help France during her military operations; and, seeing that no payment was made for these rails, whether he proposes to put in a claim for the value?

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): I am aware of the imports of scrap iron from France during the last 12 months, which are, however, considerably less than the average of the years 1920 to 1924. I have no information as to what part, if any, of this scrap iron consists of steel rails supplied by the British Government during the War. In reply to the last part of the question, the Agreement for the Funding of the French War Debt to Great Britain constitutes a final settlement of all claims in respect of supplies made to the French Government by the British Government during the War.

Oral Answers to Questions — UNEMPLOYMENT.

STEEL RAILWAY SLEEPERS.

Captain BOURNE: 10.
asked the Lord Privy Seal if the steel sleepers which the Great Western Railway Company are laying to the south-east of Oxford Station are of English manufacture?

The LORD PRIVY SEAL (Mr. J. H. Thomas): Yes, Sir, all steel sleepers used by this company are of British manufacture.

STATISTICS.

Viscount WOLMER: 11.
asked the Lord Privy Seal how many men have gained employment by reason of the activities of his Department?

Mr. THOMAS: As regards the numbers employed on unemployment relief works, I would refer the Noble Lord to the White Paper recently issued, and to the reply which I gave on the 29th April to the hon. Members for Willesden, East (Mr. D. G. Somerville), and for Moseley (Mr. Hannon), a copy of which I am sending him. As was stated in the White Paper, however, the promotion and assistance of these works forms only one aspect of the Government's unemployment policy. It is to the increased provision of ordinary industrial employment through the revival of our trade and industry that the Government attach primary importance. The Government are taking all possible steps to stimulate that revival, but it is not possible to state the result of their efforts in terms of numbers given employment or numbers kept from unemployment.

Viscount WOLMER: Does the right hon. Gentleman still say that this Government will be judged by their record in regard to unemployment?

Mr. THOMAS: I not only say that, but, when I look back on what took place under the last Government, I am quite happy in saying it.

Viscount WOLMER: Will the right hon. Gentleman give the unemployment figures of a year ago?

Lieut.-Commander KENWORTHY: Can my right hon. Friend give an estimate of what the extra number of unemployment would have been if this Government had not been in office?

Oral Answers to Questions — MERCANTILE MARINE.

HEALTH.

Sir BASIL PETO: 18.
asked the President of the Board of Trade whether he will furnish the names of those serving on the committee which has been set up to consider and advise on any questions affecting the health of the Mercantile Marine; and whether their report on the hygiene of crew spaces on board ship may be expected shortly?

Mr. W. GRAHAM: The membership of the committee is as follows:

Representing the Board of Trade

Mr. E. J. Foley (chairman),
Mr. G. E. Baker,
Mr. A. S. Hoskin,
Mr. C. J. Ovey (clerical secretary).

Representing the Ministry of Health:

Sir George S. Buchanan,
Dr. P. G. Stock,
Mr. M. Heseltine,
Mr. R. H. Crooke,
Dr. M. T. Morgan (medical secretary).

I cannot yet say when the committee will be in a position to report on the question of the improvement of the hygiene of crew spaces.

SOUND SIGNAL APPARATUS.

Mr. DAY: 27.
asked the President of the Board of Trade whether any complaints have been made to his Department on the inefficient sound signal apparatus carried by several cargo and steam ships; can he state whether, in the recent inspection made by his Department, it was shown in any case that this apparatus was defective; what action has been taken in these circumstances; will he state the number of inspectors employed by his Department for these examinations; and whether any increase has taken place during the previous five years?

Mr. W. GRAHAM: No complaints of this nature have recently been received by the Board of Trade, nor do I understand to what inspection my hon. Friend refers. Board of Trade surveyors have standing instructions to take every opportunity to inspect the sound signalling apparatus on ships, and where the apparatus is found to be defective immediate steps are taken to have the defects remedied. The number of surveyors employed on survey work of
all kinds at the ports on 1st April, 1930, was 166, compared with 170 on the corresponding date in 1925.

Mr. DAY: Is any international action possible?

Mr. GRAHAM: I should not like to reply to that off hand. Perhaps my hon. Friend will give me notice.

STEAMSHIP "SEAFORTH" (Loss).

Sir B. PETO: 19.
asked the President of the Board of Trade whether he is aware of the circumtances attending the loss off Trevose Head on 12th July last of the steamship "Seaforth" after collision with the steamship "Cristina"; how many navigating officers in addition to the master were serving on board the "Seaforth" at the time; and whether the master and the navigating officer in charge of the vessel at the time of the collision held Board of Trade certificates of competency?

Mr. W. GRAHAM: I am aware of the circumstances attending the loss of the steamship "Seaforth" on 12th July, 1929, after collision with the Spanish steamship "Cristina." In addition to the master, one navigating officer, rated as mate, was serving on the "Seaforth." Neither the master nor the mate, who was in charge of the bridge at the time of the collision, held a Board of Trade certificate, nor was this legally necessary.

COLOURED SEAMEN.

Lieut.-Commander KENWORTHY: 31.
asked the President of the Board of Trade whether he has information of the system of registering Arab seamen and firemen signing on in British ships at Antwerp and other North European ports as effected by the National Union of Seamen in conjunction with the local authorities and the British consuls; and whether he will call for a report of the working of this system, with a view to the prevention of possible abuses when signing on Asiatic and Arab seamen and firemen at British ports and their admission to this country?

Mr. WEST RUSSELL: 36.
asked the President of the Board of Trade if his attention has been called to the preference to coloured seamen which is being given by various shipping companies;
and whether he has made, or will make, any representations to such shipowners against the adoption of any such policy?

Mr. W. GRAHAM: I have obtained from the British Consul-General at Antwerp a report on the system of registering Arabs and other Asiatics who are applicants for employment on British ships at that port. If any proposals should be made to me for the adoption of a similar system at ports in this country I should be quite ready to consider them in connection with other suggestions that have been made for the prevention of possible abuses in connection with the employment of coloured seamen. As has been said before, however, the general question of the employment of coloured seamen, most of whom are British subjects, is not a matter in which the Board of Trade can usefully intervene directly.

INTERNATIONAL INSTITUTE OF REFRI GERATION.

Captain P. MACDONALD: 21.
asked the President of the Board of Trade what is the purpose of the subscription of the British Government to the International Institute of Refrigeration; and for what objects the institute exists

Mr. W. GRAHAM: This subscription is payable towards the expenses of the institute under an International Convention signed in 1920, to which His Majesty's Government are parties. The objects of the institute are broadly the promotion of the study of refrigeration problems and the distribution of information on the subject. I am sending the hon. and gallant Member a copy of the Convention, which will give him further particulars.

Oral Answers to Questions — SAFEGUARDING AND IMPORT DUTIES.

WRAPPING PAPER.

Brigadier-General Sir HENRY CROFT: 34.
asked the President of the Board of Trade whether he has received a petition urging the retention of the duty on wrapping paper in the interests of employment, signed by 8,422 workers employed in mills making wrapping paper; whether he can say what proportion of the whole number of workers in the industry is represented by these signa-
tories; and what steps he proposes to take in the matter?

Mr. W. GRAHAM: The answer to the first part of the question is in the affirmative, and to the second in the negative. For the rest, I would refer the hon. and gallant Member to the reply returned to a similar question put to me by the hon. and gallant Member for Midlothian, North (Major Colville) on 29th April.

Sir H. CROFT: Can the right hon. Gentleman inform the House what proportion of the total number of workers this figure represents?

Mr. GRAHAM: No, Sir. I am sorry that I cannot give that information. As the hon. and gallant Member knows, it is very difficult to get complete statistics, and, therefore, I cannot give an answer.

Sir H. CROFT: In view of the vital importance of this question which will come before the House for consideration before long, will the right hon. Gentleman take steps to see that this information is obtained?

Mr. GRAHAM: We do our very best in all these cases to get complete returns, but I am afraid that, short of compulsory powers, we cannot claim at any stage to cover the whole field.

Mr. HANNON: Will the right hon. Gentleman say what he is going to do with these 8,000 workers?

ARTICLES (PRICES).

Lieut.-Colonel Sir FREDERICK HALL: 42.
asked the President of the Board of Trade in which of the trades in this country at present subject to Safeguarding Duties the articles produced have been increased in price to the public owing to the existence of the duties; and how far such increase, if any, has been counterbalanced by the payment of more wages?

Mr. W. GRAHAM: Definite information as to the price movements of goods of the kinds in question is available only in respect of gloves and gas mantles, and as to these I would refer the hon. and gallant Member to the answers given to the hon. and gallant Member for Yeovil (Major Davies) and the hon. Member for Lancaster (Mr. Ramsbotham) on the 4th
and 7th April, respectively, of which I am sending him copies. I have no information as to the total amount of wages in either of these industries.

Sir F. HALL: Is it not the general policy of Members of the Government to circulate reports in the case of safeguarded industries of the increase that has taken place in the cost to the consumer, and will the right hon. Gentleman substantiate this statement by giving a categorical reply to the question I have put on the Paper?

Mr. GRAHAM: No, I can only speak for the Board of Trade, and in all these replies we give the information, I trust, with complete impartiality. As regards the two cases, in regard to gloves, the previous reply was that there has been a fall in price which has marched with the general fall in prices, whereas in the case of gas mantles the price to the consumer has actually increased.

Sir F. HALL: I agree with the reply of the right hon. Gentleman as far as the Board of Trade is concerned, but is he aware of the general statements which are made by supporters of his Government as to the effect of which I have called attention?

HOPS.

Viscount WOLMER: 55.
asked the Chancellor of the Exchequer whether he intends to propose the repeal of or any alteration in the duty on imported hops before the date of its expiry?

Mr. P. SNOWDEN: The Noble Lord must be content with the fact that I am not proposing to repeal the duty in the present Budget.

Viscount WOLMER: Will the right hon. Gentleman say what satisfaction he gets from keeping every trade in a state of chronic uncertainty?

Viscountess ASTOR: Is the Chancellor of the Exchequer being kind to hops on account of the drink trade, or is he going back—[Interruption].

Oral Answers to Questions — BRITISH ARMY.

RATION ALLOWANCES.

Mr. FREEMAN: 44.
asked the Secretary of State for War whether he is now able to reconsider the question of the
proposed reduction in ration allowances to non-commissioned officers and men on leave?

The SECRETARY of STATE for WAR (Mr. T. Shaw): This matter has been receiving my personal and anxious consideration, but I have not yet reached a final decision on it.

Mr. FREEMAN: If I repeat the question at the end of a fortnight will my right hon. Friend be in a position to answer it?

Mr. SHAW: Yes, Sir.

OFFICERS' TRAINING CORPS.

Lieut.-Commander KENWORTHY: 71.
asked the Secretary of State for War what is the present enrolled strength of the school officers' training corps?

Mr. SHAW: The strength of the junior division of the officers' training corps on 1st April, 1930, was: officers 679, cadets 34,589.

Lieut.-Commander KENWORTHY: 72.
asked the Secretary of State for War at what age are schoolboys enrolled for training in the officers' training corps?

Mr. SHAW: The Regulations lay down that no boy under 13 years of age shall be enrolled in the junior division of the officers' training corps, but subject to this restriction, it is left to the discretion of headmasters to decide at what age boys can be enrolled. Training for junior boys is modified, and no boy is permitted to go to camp until he is in his 15th year. I might add that no efficiency grant is paid in respect of any cadet who is under 15 years of age or, in the case of schools in receipt of a Parliamentary grant, who is under 16 years of age.

Lieut.-Commander KENWORTHY: May I ask what is the difference in principle between these junior cadets and the cadet corps?

Mr. SHAW: I have stated in the House that the difference between the officers' training corps and the cadet corps is that the officers' training corps consists generally of boys older than the boys of the cadet corps, but that the ages shade into one another.

Lieut.-Commander KENWORTHY: But does not that show that they are just as young?

FUEL AND LIGHT ALLOWANCES.

Sir F. HALL: 73.
asked the Secretary of State for War, with regard to the recent reduction in the special fuel and light allowance payable to officers, what this reduction is; and whether the same amount is applicable to officers of all ranks?

Mr. SHAW: The scales of issue of fuel and light and of the allowances in lieu have been revised with a view to their assessment on a more equitable and scientific basis. The revision has not resulted in any decrease in the total sum expended on this service, but it has altered the amounts issuable in various cases, causing increases in some and reductions in others. But neither the reductions nor increases are very considerable. I will quote the case of married generals and married captains as examples of the principal reductions. Married generals lose 5d. a day on the winter scale and 3d. a day on the summer scale. Married captains lose 3d. a day on the winter scale and 2d. a day on the summer scale. Married lieutenants gain 4d. a day in winter and 2d. a day in summer, and married colour-sergeants gain 3d. a day in winter and 1d. a day in summer.

GRATUITY (MR. F. H. WREN).

Colonel HOWARD-BURY: 74.
asked the Secretary of State for War whether his attention has been drawn to the case of Mr. F. H. Wren, 12, King's Road, Chelmsford, No. 631,844, gunner, Royal Horse and Royal Field Artillery, who was told that his gratuity of £15 was deposited in the Post Office Savings Bank, and since then nothing further was heard from the War Office until, on writing to inquire about this £15 in February, 1930, he was told that no trace of this deposit could be found, and that because he had not received a communication from the Comptroller it was his responsibility to write and inquire, and that they could do nothing further about it; and whether, seeing that the £15 was definitely paid in by the War Office for this man, he will reconsider this case?

Mr. SHAW: I have recently been in communication with the hon. and gallant Member regarding this case, and I much regret that, as I hate already explained
to him, it is impossible to accept Mr. Wren's claim which has been put forward after a lapse of some 10 years.

Colonel HOWARD-BURY: But is it not unfair that the War Office should try to throw the responsibility for this on the man when really the War Office are responsible for informing the man as to the place where the money had been paid?

Mr. SHAW: I have already explained to the hon. and gallant Member that all records of the payments in connection with these cases are destroyed after being kept for three years, and that we have no records to justify the statement he makes.

TATTOO, ALDERSHOT.

Colonel HOWARD-BURY: 75.
asked the Secretary a State for War whether any restrictions have been imposed by the Government on the Command Tattoo at Aldershot; and whether any officers have resigned in consequence?

Mr. SHAW: The answer to both parts of the question is in the negative.

IMPERIAL CONFERENCE.

Sir A. POWNALL: 45.
asked the Prime Minister whether he will place for consideration upon the agenda of the Imperial Conference a proposal that there should be a permanent secretariat to consider Empire questions in the intervals between conferences?

Mr. P. SNOWDEN: Proposals on the lines of that indicated in the hon. Member's question have been discussed at earlier Imperial Conferences, and as he is, no doubt, aware, a similar suggestion has been included in a report recently drawn up by the Federation of British Industries. As, however, the Prime Minister intimated on 25th March in reply to a question by the hon. Member for East Willesden (Mr. D. G. Somerville) the agenda for the Imperial Conference is now under discussion between the Governments concerned, and I could not undertake to say at this stage what particular items will eventually be included.

Sir K. WOOD: 47.
asked the Prime Minister the date when the forthcoming
Imperial Economic Conference will be held; and whether he can state, generally, the nature of the trade questions which will be included in the agenda of the Conference?

Mr. SNOWDEN: I would refer the right hon. Gentleman to the reply which the Prime Minister gave to the hon. Member for East Willesden (Mr. D. G. Somerville) on 25th March, from which it will be seen that the opening date of the Imperial Conference has been fixed for 30th September. As regards the second part of the question, the Prime Minister is not yet in a position to make any statement as to the economic subjects likely to be discussed. In reply to a previous question, I said that this matter was being discussed between the various Governments concerned.

BUSINESS OF THE HOUSE.

Sir K. WOOD: 46.
asked the Prime Minister whether he can now indicate the Bills for which he proposes to give facilities this Session?

Mr. P. SNOWDEN: No, Sir.

Sir K. WOOD: Does not the right hon. Gentleman think that it would be a good thing to put the respective supporters of these various Bills out of their misery as soon as possible?

INCOME TAX.

PROPERTY (REVALUATION).

Sir K. WOOD: 54.
asked the Chancellor of the Exchequer whether it is proposed, in connection with the forthcoming revaluation of property for the purposes of Schedule A of the Income Tax, that it should be carried out by the local assessors?

Mr. P. SNOWDEN: It is not my intention to introduce any amendment of the law in regard to the forthcoming revaluation which will affect the duties of the local assessors as prescribed under existing law.

Sir K. WOOD: May I take it that there is no question of not using the services of the local assessment committees in this matter?

Mr. SNOWDEN: They will be used precisely as they would have been used under the existing law. I do not propose to make any change at all from the previous practice.

WIVES' EARNINGS.

Mr. DAY: 61.
asked the Chancellor of the Exchequer whether, in view of the fact that under the present Income Tax law male persons are responsible to pay Income Tax on the earnings of their wives, he is considering amending the existing legislation so as to give protection to such male persons by throwing the responsibility of this payment upon the wives?

Mr. SNOWDEN: Legislation on this matter is not contemplated in connection with this year's Finance Bill.

Mr. DAY: Can the right hon. Gentleman say whether a final report has been issued by the committee which is considering the simplification of the Income Tax?

FOREIGN COUNTRIES.

Mr. MANDER: 64.
asked the Chancellor of the Exchequer if he will publish a statement showing the amount deducted from incomes of varying levels in the form of Income Tax in respect of France, Germany, Italy, and the United States, as compared with the proposals in the present Budget for this country; and whether he will give similar figures for varying rates of Death Duties?

Mr. SNOWDEN: I doubt whether the information asked for can be collected, but I will inquire whether any comparable figures can be obtained without undue labour and expense, and will communicate the result of my inquiries to the hon. Member.

DIRECT AND INDIRECT TAXATION.

Mr. TINKER: 56.
asked the Chancellor of the Exchequer the percentage of direct and indirect taxation of the Budget of 1929; and what alteration will be made in the figures by the Budget of 1930?

Mr. P. SNOWDEN: The percentage figures desired by my hon. Friend are as follow:

1929 (approximate net receipts)—


Indirect
35.82


Direct
64.18


1930 (as proposed in Budget)—


Indirect
34.47


Direct
65.53

LAND VALUES (TAXATION).

Lieut.-Colonel RUGGLES-BRISE: 57.
asked the Chancellor of the Exchequer what form of taxation he proposes to levy on land value; whether the taxation will take the form of an annual tax or a capital tax when the land is sold; whether the tax will be levied on all land whether built on or not; whether agricultural land will be included; and whether he proposes to levy rates on land values?

Mr. P. SNOWDEN: I aim not at present in a position to add anything to what I said in my Budget Statement on this matter.

Lieut.-Colonel RUGGLES-BRISE: Cannot the right hon. Gentleman give some indication of the principle of the Bill?

Mr. SNOWDEN: Of the Valuation Bill?

Lieut.-Colonel RUGGLES-BRISE: Yes.

Mr. SNOWDEN: The hon. and gallant Gentleman's curiosity will be satisfied in about a fortnight, when we propose to submit the proposals.

Sir K. WOOD: Is the right hon. Gentleman really going to introduce this Bill before the Trade Disputes Bill?

REPARATIONS (LOAN).

Mr. WISE: 58.
asked the Chancellor of the Exchequer if he will state, in view of the decision to raise a reparations loan in the principal financial centres to enable France to capitalise her prospective reparations receipts, whether he has been consulted with regard to the proposed flotation of a portion of this loan on the London market; and whether, in view of the consequences to employment in this country of a transfer of capital from Great Britain to France at the present time, he will take steps to discourage the issue?

Mr. BRACKEN: 59.
asked the Chancellor of the Exchequer how much of the proceeds of the forthcoming reparations loan this country is entitled to; and whether allowance was made for this receipt in framing the revenue estimates for the current year?

Sir LAMING WORTHINGTON-EVANS: 67.
asked the Chancellor of the Exchequer what proportions of the proceeds of the proposed £60,000,000 reparations loan will the British and the French be entitled to, respectively; and what amounts of the loan will be offered on the London and French markets, respectively?

Mr. P. SNOWDEN: Under the special arrangement concluded at The Hague,
Germany will be entitled to receive one-third of the proceeds of the proposed loan. Of the balance, France will be entitled to 78 per cent. and the British Empire to 13.1 per cent. in the absence of any special agreement to vary these percentages. It has not yet been decided on what markets the loan will be issued, but His Majesty's Government intend in any case to stipulate that the amount to be offered on the London market shall not exceed the sum which will be retained by the British Empire. With regard to the second part of the Question No. 59, the proceeds of a loan for mobilising the reparation annuities are capital receipts which will be applied to debt redemption, and no allowance was therefore made for such receipts in estimating the revenue of the current year.

Sir L. WORTHINGTON-EVANS: Can the right hon. Gentleman say why there is so large a reduction in the British Empire proportion compared with the percentages that were agreed at Spa?

Mr. SNOWDEN: They are mobilising the unconditional part of the German annuities, and under the Young Report France got by far the larger percentage of them, and therefore her share of any mobilisation must be larger.

Sir L. WORTHINGTON-EVANS: I asked the right hon. Gentleman whether the British Empire got any compensation for forgoing so large a proportion of the share to which it was entitled?

Mr. SNOWDEN: Yes, of course; the concession that I was able to get at The Hague was to bring the British percentage of the Germans' receipts to the Spa percentage.

Sir L. WORTHINGTON-EVANS: The right hon. Gentleman speaks of a concession that he was able to get; was it not rather a concession that he gave away which reduced the proportion which we should otherwise be now receiving by nearly one-half?

Mr. SNOWDEN: The right hon. Gentleman seems to forget that under the Young plan, as compared with the Dawes plan, there was a reduction of the total amount of the annuities.

Sir L. WORTHINGTON-EVANS: But is it not a fact that the result to Great Britain to-day is that she is re-
ceiving out of the cash raised by the reparations loan something like one-half of what she would have received if the Spa percentages had not been given away by the right hon. Gentleman?

Mr. SNOWDEN: I did not give away the Spa percentages; I succeeded in maintaining them. May I remind the right hon. Gentleman again that we are dealing only with part of the German annuities, the unconditional part. Our percentage of the conditional part of the annuities is much higher.

Sir L. WORTHINGTON-EVANS: Yes, but we lose the money.

Mr. SNOWDEN: We do not lose it. We are getting it in annuities instead of in a mobilised form. I do not attach very great importance to mobilisation. It may seem to suit the Germans, but I do not think it suits this country very much.

Sir B. PETO: 62.
asked the Chancellor of the Exchequer why the certified schedule of the monthly and annual shares of each creditor Government to reparations from Gemany, which is referred to as Exhibit C in the text of the agreements concluded at the Hague Conference, is not printed in Command Paper 3484; and whether he will have it printed as a White Paper, so that Members may be able to compare it with the figures of the shares proposed by the committee of experts which are set out in Command Paper 3343 before these agreements come before the House for ratification?

Mr. SNOWDEN: The draft Trust Agreement, which forms Annex VIII to the Agreement with Germany concluded at the Hague Conference, did not include the detailed table which will form Exhibit C, and this table is not therefore included in Command Paper 3484 which gives the texts as signed at the Hague. This table will merely set forth the shares of the creditor Governments in the German annuities as proposed in the Experts' Report (Command Paper 3343) and will not include the additional annuities which Great Britain will receive from France, Belgium and Italy in accordance with the Hague Protocol of 31st August, 1929 (Command Paper 3392). I will consider the suggestion that the Trust
Agreement as finally signed, including Exhibit C, should be presented to Parliament as a White Paper.

Sir B. PETO: Do I understand that the House will be in a position to compare the figures given in detail in Exhibit C before this question is discussed?

Mr. SNOWDEN: I have already said that I am quite prepared to consider the issue of a White Paper, and then the hon. Member will be able to make any comparisons he desires.

Sir L. WORTHINGTON-EVANS: Will the right hon. Gentleman issue a White Paper showing exactly what the British Empire is going to get both in conditional and unconditional annuities, so that we may be able to compare it with what we should have got under the Spa percentages?

Mr. SNOWDEN: I do not understand what the right hon. Gentleman means by constantly referring to the Spa percentages. As I have pointed out, the Spa percentages have been maintained.

Sir L. WORTHINGTON-EVANS: They have not.

Mr. SNOWDEN: They have been maintained, and if the right hon. Gentleman had listened to my answer this table will give the share of the creditor Governments in German annuities as proposed in the Experts' Reports, but it will not include the additional annuities which Great Britain is to receive from France, Belgium and Italy in accordance with the Protocol of 31st August, 1929.

Sir L. WORTHINGTON-EVANS: It is because I listened to the answer that I asked the right hon. Gentleman another question. Will he publish a White Paper so that we may know exactly what Great Britain is to receive under the agreements and the Protocol which he made at the Hague, for I wish to compare it with what we should have got if he had not given away the percentages at Spa.

Mr. SNOWDEN: I have not the slightest hesitation in supplying the information which the right hon. Gentleman wishes, and he can put it to any purpose he thinks fit.

Mr. WISE: May I ask—[Interruption.]

Mr. MACLEAN: On a point of Order. On a previous question the right hon. Gentleman put six supplementary questions to the Chancellor of the Exchequer and on the present question he has put three supplementaries, and you do not allow, Mr. Speaker, any question to be put by an hon. Member on this side of the House.

Mr. SPEAKER: It does not occur to me that any point of Order arises.

SAVINGS BANKS (RATE OF INTEREST).

Mr. BRACKEN: 60.
asked the Chancellor of the Exchequer whether he proposes to increase the rate of interest paid to depositors in the Post Office Savings Bank and in trustee savings banks?

Mr. P. SNOWDEN: It is not at present my intention to raise the rate of interest paid to depositors in the Post Office Savings Bank and in trustee savings banks. I need not remind the hon. Member that the existing rate compares favourably with that of 1 per cent. which is now being ordinarily allowed on time deposits by the joint stock banks.

Mr. BRACKEN: Yes, but the right hon. Gentleman surely must be aware that a most solemn pledge was given by his party during the General Election that this interest would be raised?

Mr. A. M. SAMUEL: What does the right hon. Gentleman mean by the words "at present"? Does he mean to do it later on? Is he aware that Lord Arnold gave this pledge most distinctly on behalf of the Labour party?

Mr. SNOWDEN: I do not remember the terms of the pledge, but I believe it was that this matter would be considered. It has been considered. May I remind the two hon. Members of the different circumstances of to-day as compared with 18 months ago, when the rate of interest on current deposits was 3½ per cent., whereas now it is only 1 per cent?

Mr. SAMUEL: Are we to understand that the Chancellor of the Exchequer sub-
scribes to the theory that he can alter a pledge because the circumstances have altered?

Mr. SNOWDEN: The hon. Member can understand exactly what he likes.

Sir F. HALL: Is the right hon. Gentleman aware, when he refers to the different conditions of the finance market, that loans are being raised to-day on the same basis as six months and 12 months ago? A loan was issued yesterday by New Zealand at 5 per cent.

Mr. SNOWDEN: I am not aware of the slightest connection between the issue of that loan and the subject matter of this question.

INTERNATIONAL BANK.

Mr. MANDER: 63.
asked the Chancellor of the Exchequer what major appointments have been given to nationals of England, France, Germany, Italy, and the United States on the staff of the International Bank; and whether the Government have used their influence to see that this country is adequately represented in the personnel of the bank?

Mr. P. SNOWDEN: I understand that the board of the Bank for International Settlements are at present organising the staff of the bank, but I have no special information on the matter; the bank is a commercial and non-political institution, and there is no question of Government intervention in regard to the appointment of its staff.

Mr. MANDER: Are not the Governments of France and Germany exercising a great deal of pressure in the interests of their own country, and cannot the British Government do the same?

ESTATE DUTIES.

Mr. SHAKESPEARE: 66.
asked the Chancellor of the Exchequer what proportion of the yield of estate duties is derived from agricultural estates?

Mr. P. SNOWDEN: I would refer the hon. Member to the answer given to the hon. and gallant Member for Newbury (Brigadier-General Clifton Brown) on 6th February last, of which I am sending him a copy. No later figures are available.

GOVERNMENT DEPARTMENTS.

ADMISSION (REGULATION).

Sir WILLIAM DAVISON: 68.
asked the Financial Secretary to the Treasury under what circumstances and for what reason has an alteration recently been made in the old regulation for admission to the British Civil Service under which it was necessary for candidates to be natural-born British subjects and the children of fathers who were also natural-born British subjects?

Mr. PETHICK-LAWRENCE: The purpose of the alteration is to admit to the Civil Service a natural-born British subject, the child of a person who is or was at the time of death a British subject, thus bringing the Civil Service Regulation into line with the rules for admission to the commissioned ranks of the Defence forces.

CINEMATOGRAPH ACT.

Mr. A. M. SAMUEL: 69.
asked the Financial Secretary to the Treasury the amount of overtime earned recently by clerks employed to deal with the work under the Cinematograph Act, and the number of hours worked a day by clerks in other departments; and whether he will arrange for the transfer of clerks from departments in which there is a shortage of work to departments where the staff is overworked?

Mr. PETHICK-LAWRENCE: So far as I am aware, the administration of the Act referred to has not recently given rise to the employment of civil servants on overtime.

Mr. SAMUEL: Is the hon. Member aware that the statement that a large amount of overtime was being earned under this Act was made by a delegate from Camberwell at a conference of young Liberals at Chester on 21st April last?

Mr. PETHICK-LAWRENCE: I am not aware of that, and, as far as I know, it is not the case.

Mr. SAMUEL: Will the hon. Gentleman inquire?

PIT PONIES.

Mr. FREEMAN: 76.
asked the Secretary for Mines whether he is aware that a pit pony in Staffordshire has recently
been brought to the surface after having been down a mine continuously for 29 years; and whether he will arrange that all ponies working down mines shall be brought to the open fields at least a fortnight each year?

The SECRETARY for MINES (Mr. Ben Turner): If I am right in assuming that my hon. Friend is referring to a pony named "Lloyd George," a picture of which appeared in the Press on 16th April, the Press report is inaccurate. That pony is 18 and not 29 years of age, and except for a month or two has always been stabled on the surface. I am in sympathy with the object of the proposal in the second part of the question, and I hope that colliery managements will do what they can in that direction; except during a period of continued warm weather pit ponies would suffer and not benefit from being brought to the surface. For this and other reasons it would not be practicable to make any general or standing rule.

Viscountess ASTOR: If these ponies have to work under the surface, would it not be almost better to keep them down continuously, because, it seems to me, for them to come up and then have to go down again is almost worse than not coming up?

Mr. TURNER: One of the inspectors has given me the following information: that some of the ponies were brought up on Goad Friday for a week in the fields, but that they shivered with the cold and were taken back into the pit for their own safety.

Mr. FREEMAN: Is it not a fact that pit ponies are not the only ones who shiver on holidays?

Viscountess ASTOR: Is it not a fact that pit ponies cannot talk on holidays?

OIL CAKE MILL EXPLOSION, LIVERPOOL.

Mr. HALL CAINE: (by Private Notice) asked the Secretary of State for the Home Department if he can make any statement on the accident which took place on Monday, 5th May, in the Bibby Oil Cake Mills, Great Howard Street, Liverpool, in which a number of people have lost their lives?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Clynes): I have received to-day a preliminary report on this distressing disaster, which has, I deeply regret to say, involved the loss of several lives and a number of serious injuries. The circumstances call for searching investigation, and it is much too early to arrive at any definite conclusion, but the explosion is thought, at present, to have resulted from a spontaneous combustion of rice meal in one of the silos, which ignited a cloud of dust within the silo. The Chief Inspector of Factories informs me that he has sent one of the Engineering Inspectors, who has special experience of these dust explosions, to Liverpool to assist in the inquiry. I would take this opportunity to express the sympathy, which I know will be felt by everyone in this House, with the relatives of the deceased.

MOCK AUCTIONS BILL.

Reported, so far as amended, from Standing Committee B.

Leave given to the Committee to make a Special Report.

Special Report brought up, and read.

Report and Special Report to lie upon the Table, and to be printed. [No. 121.]

Minutes of the Proceedings of the Standing Committee to be printed. [No. 121.]

TOLLS BILL.

Order for Consideration, as amended (in tire Standing Committee), upon Friday read, and discharged; Bill withdrawn.

ROCHDALE CORPORATION (No. 2) BILL.

Reported, with Amendments [Title amended]; Report to lie upon the Table, and to be printed.

LONDON COUNTY COUNCIL (CHARING CROSS BRIDGE) BILL.

Reported [Preamble not proved]; Report to lie upon the Table.

Leave given to the Committee on Group F of Private Bills to make a Special Report.

Special Report brought up, and read; to lie upon the Table and to be printed.

MESSAGE FROM THE LORDS.

That they have agreed to—

Bristol Corporation (No. 1) Bill (Certified Bill), with Amendments.

That they have passed a Bill, intituled, "An Act to transfer to and vest in the Mayor, Aldermen, and Burgesses of the borough of Boston the undertaking of the Boston Waterworks Company; to authorise the said Mayor, Aldermen, and Burgesses to supply water in, and in the neighbourhood of, the borough; to make further provisions with respect to the finance of the borough; and for other purposes." [Boston Corporation Bill [Lords].]

BRISTOL CORPORATION (No.1) BILL (Certified Bill),

Lords Amendments to be considered to-morrow, pursuant to the Order of the House of 11th December.

BOSTON CORPORATION BILL [Lords],

Read the First time; and referred to the Examiners of Petitions for Private Bills.

Orders of the Day — WAYS AND MEANS.

REPORT (14TH APRIL).

Order read for Consideration of Sixth and subsequent Resolutions.

Sixth Resolution read a Second time.

Captain BOURNE: I beg to move, to leave out from the word "tax" in line 4 to the word "were" in line 5.
The effect of this Amendment would be to omit the words
(other than the last such reference in Sub-section (9) of the said section).
I move this Amendment in order to call attention to the extraordinarily unsatisfactory drafting of this Resolution. If hon. Members will turn up Section 32 of the Income Tax Act, 1918, they will observe that the words "standard rate" do not occur anywhere in that Section, and, secondly, that the Section contains only seven Sub-sections and not nine, as stated. I must say when I first saw this Resolution and read the Section that I was under the impression that there had been a misprint, and that the right hon. Gentleman intended to refer to the provisos in Sub-section (3). Since the House met this afternoon it has been brought to my notice that the right hon. Gentleman is proposing an amendment of the Income Tax Act, 1918, which takes the place of Section 24 of the Finance Act, 1920. It is difficult enough for ordinary Members of the House to understand when reference is made to an amended section of the Act, but I submit that when Resolutions of this kind are put on the Order Paper, they should be put down in such a way that hon. Members of this House can understand them.
When the Chancellor of the Exchequer refers to an amending Section, I think that the least he can possibly do is to make the Resolution slightly more intelligible, and he should direct attention to the fact that he is dealing not with the original Section of the Act of 1918, but with that Section as amended by another Section of the Act of 1920. I know that the Chancellor of the Exchequer has some extremely able experts to consult on this subject, but I should
like to point out that there is nothing in this Resolution to indicate that if you want to understand it you must refer to Section 24 of the Act of 1920. I wish emphatically to protest against this method of so drafting Resolutions that they are utterly unintelligible to those who take an interest in the work of this House. If the Government survive to bring in any more Finance Bills I trust that when they are dealing with an amending Act, they will have the kindness and courage to refer to that fact in the Resolution.

Mr. MARJORIBANKS: I beg to second the Amendment.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): In so far as the question of the drafting of this Resolution arises to which the hon. and gallant Member for Oxford (Captain Bourne) has referred, I will have the matter looked into. I gather that the hon. and gallant Member is not objecting to this Resolution in substance, and I do not know whether he wishes me to deal only with the technical point which he has raised.

Mr. CHURCHILL: I understood that the Financial Secretary was going to give us a full explanation of the merits of this Resolution, and I think we all desire to hear his statement.

Mr. PETHICK-LAWRENCE: The object of the Sixth Resolution as a whole is not raised by this Amendment. The object of this Resolution is to reduce the allowance given in relief from Income Tax in respect of life insurance premiums in order to bring them into line with the reduction which is going to be made in the Finance Bill in which, instead of the first £225, in future £250 will be subject not to the half rate but to 2s. in the £. It is because of that that we are proposing to deal with life insurance premiums on the same principle. It will be seen that life insurance premiums would have been considerably benefited by this proposal, whereas the intention is to keep them as they are at the present time. The Amendment which has been moved by the hon. and gallant Member for Oxford deals with the words
(other than the last such reference in Sub-section (9) of the said section).
The Income Tax Act, 1918, as amended, contains those words in Sub-section (9), which I do not think it is necessary for me to read because it is very complicated. The Acts relating to the relief from Income Tax in respect of life insurance premiums are dealt with in this Resolution, and it deals with those insurance premiums taken out before 1916 and those taken out after 1916.
This particular Sub-section to which the hon. and gallant Member for Oxford referred deals with persons whose life insurance premiums were taken out before the year 1916 and it makes certain allowances in the case of persons with incomes below £1,000 between £1,000 and £2,000 and incomes exceeding £2,000. If the provision in the Sub-section had not been made there would be certain jumps and in consequence of that a person who for example had just under £2,000 income would be actually paying more tax than a person on the other side of the margin. In order to put that right it was necessary to bring in Sub-section (9) to which the Amendment refers in order to make the passage over the margin a smooth one instead of proceeding by a jump. If the Amendment were carried the principle underlying this Sub-section would be upset and therefore it is proposed to keep the amount at 4s. 6d. which is the standard rate so far as that Sub-section is concerned while altering the standard rate to 4s. for the general purposes of the Resolution. I hope that I have made that point clear.

4.0 p.m.

Sir LAMING WORTHINGTON-EVANS: My hon. and gallant Friend moved the Amendment in order to get from the Government an undertaking "not to do it again." What the Government have done in the Resolution is to refer to the Act of 1918, but they have not referred to the Act of 1920, which amended the Act of 1918. They have thus given to every Member who has tried to find out what the Government are proposing an immense amount of quite unnecessary trouble. My hon. and gallant Friend spent hours this morning in trying to find out what it was that the Government intended to amend. The Resolution refers to the Act of 1918. It is not the Act of 1918 only that is dealt with; it is the Act of 1918 as amended by the
Act of 1920. I now ask the Government to say that this is an undesirable practice that they are adopting and that they will not do it again. That is the least the Government can do for the sake of our Debates and in the interests of every Member of the House. The Financial Secretary to the Treasury dealt with the merits of the Resolution. As I understand the Resolution it is intended to prevent certain taxpayers who have now to pay a 4s. 6d. in the £ tax from getting the benefit of the insurance premium that they pay by way of deduction from their income, and therefore freeing those insurance premiums of the 4s. 6d. tax. These people are not to have 4s. 6d. relief although they pay 4s. 6d. Income Tax, but 4s. relief.

Mr. PETHICK-LAWRENCE indicated dissent.

Sir L. WORTHINGTON-EVANS: Then is it half? Does it mean that instead of having 2s. 3d. relief, in the case of those who are entitled to deduct half the amount of the tax, they are in future to deduct only 2s., although they pay 2s. 3d.? If it is not so I shall be glad to be informed.

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): We seem to be getting a little confused. Would it not be better to postpone the discussion of the matter until the appropriate Amendment has been moved?

Mr. SPEAKER: We had better get rid of this Amendment first.

Mr. SNOWDEN: I never saw the Amendment until about five minutes ago. The hon. and gallant Member who moved it made some complaint about the framing of the Resolution and its reference to the Act of 1918; and then the right hon. Gentleman who has just spoken stated that the Act of 1918 was amended by the Act of 1920. I am informed that the Resolution is drafted in the usual form in referring to the principal Act. In the Finance Bill reference will be made to the amending of that 1918 Act.

Lieut.-Colonel Sir FREDERICK HALL: Does the right hon. Gentleman not think it would be better, in a case where an Act has been altered, as here, to state "The Act of 1918 as altered by the Act of 1920"?

Mr. SNOWDEN: As I have said, that will be made quite clear in the terms of the Finance Bill. I am informed that the drafting of the Resolution conforms with all precedents.

Captain CROOKSHANK: On a point of Order. If the Resolution refers only to the Act of 1918 will it be competent for the House to discuss a Finance Bill which refers to the amending Act of 1920? Surely the terms of the Resolution govern the Bill and it is not the other way round?

Mr. SPEAKER: That probably is so.

Mr. PETHICK-LAWRENCE: On that point of Order, it is not a question of the correctness of the phrase in the Resolution, but whether it is the most suitable phrase for the convenience of Members of this House. I submit that the phrase used is perfectly correct to cover the point, and that it is the usual method adopted in a Resolution of this kind. In the Finance Bill it is elaborated for the convenience of Members. There is nothing inconsistent with giving a wider explanation in the Finance Bill, but there is a narrower and more technical form in the Resolution.

Mr. ARTHUR MICHAEL SAMUEL: Is that so? We are now altering the provisions of the Act of 1920. I do not want to be polemical, but let us be clear. We are altering something in the Act of 1920, yet here it says in plain black and white that we are altering something in the Act of 1918. I submit that we ought not to proceed further until a reference to the Act of 1920 is inserted.

Mr. SPEAKER: I saw this Amendment only just before I came into the House. It is rather a technical point upon which to give a decision. From what has been said the form of the Resolution follows the common practice and there is nothing unusual in it.

Mr. CHURCHILL: On the general question, in view of what has passed we shall feel it our duty to divide on the Amendment as an indication to the Government of the importance of clarity in the drafting of their Resolutions.

Question put, "That the words proposed to be left out stand part of the Resolution."

The House divided: Ayes, 247; Noes, 128.

Division No. 271.]
AYES.
[4.10 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Daggar, George
Hamilton, Sir R. (Orkney & Zetland)


Adamson, W. M. (Staff., Cannock)
Dallas, George
Hardie, George D.


Addison, Rt. Hon. Dr. Christopher
Davies, Rhys John (Westhoughton)
Harris, Percy A.


Altchison, Rt. Hon. Craigle M.
Day, Harry
Hastings, Dr. Somerville


Alexander, Rt. Hon. A. V. (Hillsbro')
Denman, Hon. R. D.
Haycock, A. W.


Alpass, J. H.
Dickson, T.
Hayday, Arthur


Arnott, John
Dukes, C.
Hayes, John Henry


Ayles, Walter
Ede, James Chuter
Henderson, Thomas (Glasgow)


Baker, John (Wolverhampton, Bilston)
Edmunds, J. E.
Henderson, W. W. (Middx., Enfield)


Baldwin, Oliver (Dudley)
Edwards, C. (Monmouth, Bedwellty)
Herriotts, J.


Barnes, Alfred John
Edwards, E. (Morpeth)
Hirst, G. H. (York W. R. Wentworth)


Barr, James
Egan, W. H.
Hirst, W. (Bradford, South)


Batey, Joseph
Elmley, Viscount
Hoffman, P. C.


Bellamy, Albert
England, Colonel A.
Hollins, A.


Benn, Rt. Hon. Wedgwood
Foot, Isaac
Hopkin, Daniel


Bennett, Captain E. N. (Cardiff, Central)
Freeman, Peter
Horrabin, J. F.


Benson, G.
Gardner, B. W. (West Ham, Upton)
Hudson, James H. (Huddersfield)


Bevan, Aneurin (Ebbw Vale)
Gardner, J. P. (Hammersmith, N.)
Hunter, Dr. Joseph


Blindell, James
George, Major G. Lloyd (Pembroke)
Hutchison, Maj.-Gen. Sir R.


Bondfield, Rt. Hon. Margaret
Gibbins, Joseph
Isaacs, George


Bowerman, Rt. Hon. Charles W.
Gibson, H. M. (Lancs, Mossley)
Jenkins, W. (Glamorgan, Neath)


Broad, Francis Alfred
Gill, T. H.
John, William (Rhondda, West)


Brockway, A. Fenner
Gillett, George M.
Jones, F. Llewellyn- (Flint)


Bromley, J.
Glassey, A. E.
Jones, Henry Haydn (Merioneth)


Brooke, W.
Gossling, A. G.
Jones, J. J. (West Ham, Silvertown)


Brown, Rt. Hon. J. (South Ayrshire)
Gould, F.
Jones, Morgan (Caerphilly)


Burgess, F. G.
Graham, D. M. (Lanark, Hamll'on)
Jones, T. I. Mardy (Pontypridd)


Buxton, C. R. (Yorks, W. R. Elland)
Graham, Rt. Hon. Wm. (Edin., Cent.)
Jowett, Rt. Hon. F. W.


Caine, Derwent Hall.
Granville, E.
Jowitt, Rt. Hon. Sir W. A.


Cameron, A. G.
Gray, Milner
Kennedy, Thomas


Cape, Thomas
Greenwood, Rt. Hon. A. (Colne)
Kenworthy, Lt.-Com. Hon. Joseph M.


Carter, W. (St. Pancras, S. W.)
Griffith, F. Kingsley (Middlesbro' W.)
Kinley, J.


Chater, Danlel
Griffiths, T. (Monmouth, Pontypool)
Knight, Holford


Church, Major A. G.
Groves, Thomas E.
Lambert, Rt. Hon. George (S. Molton)


Cluse, W. S.
Grundy, Thomas W.
Lang, Gordon


Cocks, Frederick Seymour
Hall, F. (York, W. R., Normanton)
Lansbury, Rt. Hon. George


Compton, Joseph
Hall, Capt. W. P. (Portsmouth, C.)
Lathan, G.


Cowan, D. M.
Hamilton, Mary Agnes (Blackburn)
Law, A. (Rossendale)


Lawrence, Susan
Owen, Major G. (Carnarvon)
Snowden, Rt. Hon. Philip


Lawson, John James
Owen, H. F. (Hereford)
Snowden, Thomas (Accrington)


Lawther, W. (Barnard Castle)
Palin, John Henry
Sorensen, R.


Leach, W.
Perry, S. F.
Stamford, Thomas W.


Lee, Frank (Derby, N. E.)
Pethick-Lawrence, F. W.
Stewart, J. (St. Rollox)


Lee, Jennie (Lanark, Northern)
Phillips, Dr. Marlon
Strachey, E. J. St. Loe


Lees, J.
Picton-Turbervill, Edith
Strauss, G. R.


Lindley, Fred W.
Pole, Major D. G.
Sullivan, J.


Lloyd, C. Ellis
Potts, John S.
Taylor, W. B. (Norfolk, S. W.)


Logan, David Gilbert
Price, M. P.
Thomas, Rt. Hon. J. H. (Derby)


Longbottom, A. W.
Quibell, D. F. K.
Thorne, W. (West Ham, Plaistow)


Longden, F.
Ramsay, T. B. Wilson
Thurtle, Ernest


Lunn, William
Raynes, W, R.
Tillett, Ben


McEntee, V. L.
Richardson, R. (Houghton-le-Spring)
Tinker, John Joseph


Mackinder, W.
Riley, Ben (Dewsbury)
Trevelyan, Rt. Hon. Sir Charles


McKinlay, A.
Riley, F. F. (Stockton-on-Tees)
Turner, B.


MacLaren, Andrew
Ritson, J.
Vaughan, D. J.


Maclean, Neil (Glasgow, Govan)
Roberts, Rt. Hon. F. O. (W. Bromwich)
Viant, S. P.


MacNeill-Weir, L.
Romeril, H. G.
Walkden, A. G.


Macpherson, Rt. Hon. James I.
Rosbotham, D. S. T.
Walker, J.


McShane, John James
Rothschild, J. de
Watkins, F. C.


Malone, C. L'Estrange (N'thampton)
Rowson, Guy
Watson, W. M. (Dunfermline)


Mansfield, W.
Salter, Dr. Alfred
Wedgwood, Rt. Hon. Josiah


March, S.
Samuel, H. W. (Swansea, West)
Wellock, Wilfred


Markham, S. F.
Sanders, W. S.
Welsh, James (Paisley)


Marley, J.
Sandham, E.
Welsh, James C. (Coatbridge)


Marshall, Fred
Sawyer, G. F.
West, F. R.


Mathers, George
Scurr, John
Westwood, Joseph


Matters, L. W.
Shakespeare, Geoffrey H.
Wheatley, Rt. Hon. J.


Melville, Sir James
Shaw, Rt. Hon. Thomas (Preston)
Whiteley, Wilfrid (Blrm., Ladywood)


Messer, Fred
Shepherd, Arthur Lewis
Whiteley, William (Blaydon)


Millar, J. D.
Sherwood, G. H.
Wilkinson, Ellen C.


Montague, Frederick
Shield, George William
Williams, David (Swansea, East)


Morley, Ralph
Shiels, Dr. Drummond
Wilson, C. H. (Sheffield, Attercliffe)


Morris, Rhys Hopkins
Shillaker, J. F.
Wilson, J. (Oldham)


Morris-Jones, Dr. J. H. (Denbigh)
Shinwell, E.
Wilson, R. J. (Jarrow)


Morrison, Herbert (Hackney, South)
Short, Alfred (Wednesbury)
Winterton, G. E. (Leicester, Loughb'gh)


Morrison, Robert C. (Tottenham, N.)
Simmons, C. J.
Wise, E. F.


Mort, D. L.
Simon. E. D. (Manch'ter, Withington)
Wood, Major McKenzie (Banff)


Moses, J. J. H.
Sinclair, Sir A. (Caithness)
Wright, W. (Rutherglen)


Mosley, Lady C. (Stoke-on-Trent)
Sinkinson, George
Young, R. S. (Islington, North)


Muff, G.
Smith, Alfred (Sunderland)



Murnin, Hugh
Smith, Ben (Bermondsey, Rotherhithe)
TELLERS FOR THE AYES.—


Nathan, Major H. L.
Smith, Frank (Nuneaton)
Mr. Allen Parkinson and Mr.


Newman, Sir R. H. S. D. L. (Exeter)
Smith, H. B. Lees- (Keighley)
Paling.


Oldfield, J. R.
Smith, Tom (Pontefract)



NOES.


Acland-Troyte, Lieut.-Colonel
Davies, Dr. Vernon
James, Lieut.-Colonel Hon. Cuthbert


Allen, Sir J. Sandeman (Liverp'l., W.)
Davies, Maj. Geo. F. (Somerset, Yeovil)
King, Commodore Rt. Hon. Henry D.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Davison, Sir W. H. (Kensington, S.)
Knox, Sir Alfred


Astor, Viscountess
Dugdale, Capt. T. L.
Lamb, Sir J. Q.


Atholl, Duchess of
Eden, Captain Anthony
Law, Sir Alfred (Derby, High Peak)


Baillie-Hamilton, Hon. Charles W.
Edmondson, Major A. J.
Leighton, Major B. E. P.


Baldwin, Rt. Hon. Stanley (Bewdley)
Elliot, Major Walter E.
Llewellin, Major J. J.


Beamish, Rear-Admiral T. P. H.
Erskine, Lord (Somerset, Weston-s-M.)
Locker-Lampson, Rt. Hon. Godfrey


Beaumont, M. W.
Everard, W. Lindsay
Lymington, Viscount


Betterton, Sir Henry B.
Falle, Sir Bertram G.
McConnell, Sir Joseph


Bird, Ernest Roy
Ferguson, Sir John
Macquisten, F. A.


Bourne, Captain Robert Croft
Fison, F. G. Clavering
MacRobert, Rt. Hon. Alexander M.


Bowater, Col. Sir T. Vansittart
Forestler-Walker, Sir L.
Margesson, Captain H. D.


Bowyer, Captain Sir George E. W.
Ganzoni, Sir John
Marjoribanks, E. C.


Bracken, B.
Gault, Lieut.-Col. Andrew Hamilton
Mitchell, Sir W. Lane (Streatham)


Briscoe, Richard George
Gilmour, Lt.-Col. Rt. Hon. Sir John
Monsell, Eyres, Com. Rt. Hon. Sir B.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Glyn, Major R. G. C.
Morrison, W. S. (Glos., Cirencester)


Buchan, John
Graham, Fergus (Cumberland, N.)
Muirhead, A. J.


Buckingham, Sir H.
Grattan-Doyle, Sir N.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)


Bullock, Captain Malcolm
Gunston, Captain D. W.
O'Neill, Sir H.


Castle Stewart, Earl of
Hall, Lieut.-Col. Sir F. (Dulwich)
Ormsby-Gore, Rt. Hon. William


Cautley, Sir Henry S.
Hammersley, S. S.
Peake, Capt. Osbert


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Hanbury, C.
Peto, Sir Basil E. (Devon, Barnstaple)


Chamberlain, Rt. Hon. N. (Edgbaston)
Hannon, Patrick Joseph Henry
Pownall, Sir Assheton


Chapman, Sir S.
Haslam, Henry C.
Preston, Sir Walter Rueben


Christie, J. A.
Henderson, Capt. R. R. (Oxf'd, Henley)
Ramsbotham, H.


Churchill, Rt. Hon. Winston Spencer
Hennessy, Major Sir G. R. J.
Remer, John R.


Cockerill, Brig.-General Sir George
Hills, Major Rt. Hon. John Waller
Rentoul, Sir Gervals S.


Cohen, Major J. Brunel
Hope, Sir Harry (Forfar)
Roberts, Sir Samuel (Ecclesall)


Colfox, Major William Philip
Horne, Rt. Hon. Sir Robert S.
Ross, Major Ronald D.


Colville, Major D. J.
Howard-Bury, Colonel C. K.
Ruggles-Brise, Lieut.-Colonel E. A.


Courthope, Colonel Sir G. L.
Hudson, Capt. A. U. M. (Hackney, N.)
Russell, Alexander West (Tynemouth)


Cranborne, Viscount
Hunter-Weston, Lt.-Gen. Sir Aylmer
Salmon, Major I.


Crookshank, Cpt. H. (Lindsey, Gainsbro)
Hurd, Percy A.
Samuel, A. M. (Surrey, Farnham)


Dalrymple-White, Lt.-Col. Sir Godfrey
Hurst, Sir Gerald B.
Sandeman, Sir N. Stewart




Savery, S. S.
Tinne, J. A.
Windsor-Clive, Lieut.-Colonel George


Skelton, A. N.
Titchfield, Major the Marquess of
Winterton, Rt. Hon. Earl


Smith, Louis W. (Sheffield, Hallam)
Todd, Capt. A. J.
Womersley, W. J.


Smithers, Waldron
Train, J.
Wood, Rt. Hon. Sir Kingsley


Spender-Clay, Colonel H.
Vaughan-Morgan, Sir Kenyon
Worthington-Evans, Rt. Hon. Sir L.


Stanley, Lord (Fylde)
Wardlaw-Milne, J. S.



Steel-Maitland, Rt. Hon. Sir Arthur
Warrender, Sir Victor
TELLERS FOR THE NOES.—


Stuart, Hon. J. (Moray and Nairn)
Waterhouse, Captain Charles
Sir George Penny and Captain


Sueter, Rear-Admiral M. F.
Wells, Sydney R.
Wallace.

Captain CROOKSHANK: On a point of Order, arising out of the point that I put earlier. Would it be in order to move the postponement of further debate on this Resolution until the point in question has been cleared up? You stated, Mr. Speaker, that it was a manuscript Amendment, and you had not had time to consider it in all its aspects. It was not clear to some of us, when the reply was given on behalf of the Government, that the Financial Secretary was fully seized of the point at issue. If the point is going to make some difficulty in the drafting of the Finance Bill, and if it is going to mean that at a later stage we shall need a fresh Resolution in order to put the Finance Bill into proper form to deal with the point, would it not be better to postpone the further consideration of this Resolution and to take the other Resolutions, leaving this Resolution to be debated later, when the authorities have been consulted and we can be assured that this matter relates to the Finance Act of 1920?

The ATTORNEY-GENERAL (Sir William Jowitt): Under the Interpretation Act, the reference to Section 32 of the Income Tax Act, 1918, means that Section as amended by any subsequent legislation. Consequently, although this may be an inconvenient way of doing it, is it not a fact that, technically, the reference to Section 32 of the Income Tax Act, 1918, means that Section as amended by the Act of 1920?

Captain CROOKSHANK: I am not learned in the law, but the Interpretation Act does not apply to Resolutions which are on the Order Paper, but merely to Acts passed by this House. We are dealing with a Resolution and not with an Act.

Mr. SPEAKER: Since I was asked to deal with the point of Order earlier, I have had time to consider the matter, and I find that the Resolution as it stands is quite in order, and there is no need to change it. If the hon. and
gallant Member wishes to amend it he had better wait until the Finance Bill is introduced, and then he can move an Amendment.

Captain BOURNE: I beg to move, in line 6, at the end, to insert the words "and threepence."
My object in moving the Amendment is to find out from the Government precisely what is their intention in regard to this Resolution. Section 26 of the Finance Act of 1920 says:
Shall, subject as hereinafter provided, be entitled to have the amount of tax payable by him reduced by a sum representing tax at the appropriate rate on the amount of the premium paid by him for any such insurance or contract or on the amount of the sum paid by him or deducted from his salary or stipend.
It then proceeds to make provision for relief in respect of a certain proportion of the standard rate of Income Tax. As I read the Resolution, I think, possibly, the effect may be that no matter what the standard rate of Income Tax may be in any given year, no person will be entitled to have more than a proportion of 4s. in the pound deducted from his Income Tax in respect of premium paid on insurance policies. If I am right, it seems to me that the Chancellor of the Exchequer is undertaking a new line of policy. It has been the policy of several Chancellors of the Exchequer to encourage individuals to insure their lives and with that object in view they have been granted exemption from Income Tax on the premiums paid in respect of such insurance. That has not only encouraged saving, but it has encouraged men to make provision for their widows and children in the event of their death. There is very much to be said for encouraging that saving, and I cannot understand why the Chancellor of the Exchequer on this occasion is seeking to alter what has been the law of this country at any rate since 1920, and why he is saying that, whatever the Income Tax may be, he is laying down an arbitrary rate of 4s. which shall be regarded
as the standard rate. That is a bad proposal, if my interpretation is right, and I should like an explanation from the Chancellor of the Exchequer.

Mr. HAMMERSLEY: I beg to second the Amendment.

Mr. P. SNOWDEN: The hon. and gallant Member for Oxford (Captain Bourne) has raised a point in regard to the appropriate rate of rebate on life insurance policies, and he suggested that in a future year even if Income Tax were raised to 6s. in the pound, persons entitled to rebate on life insurance policies would only be able to get a proportionate reduction by reference to the rate of 4s. in the pound. If in the future there should be a change in the rate of Income Tax, it might be necessary to reconsider the position. The Financial Secretary dealt briefly with this point in connection with the previous Amendment, and he pointed out that, unless the law were amended, a person would be able to deduct on account of life insurance premium which did not exceed one-sixth of his total income, Income Tax at the rate of 2s. 3d. in the pound, that is, half the standard rate of Income Tax. What we are proposing is that the deduction should be at 2s. in the pound and not at 2s. 3d. in the pound. If he were permitted to deduct Income Tax at the rate of 2s. 3d. in the pound, the result would be that in nearly all cases the insured person would be getting a deduction on his insurance premiums of 3d. in the pound more than the Income Tax he had actually paid. He will pay 2s. in the pound in future, not on the first £225 of taxable income, but upon the first £250, instead of 2s. 3d. That is the reason why we are making the deduction for Income Tax purposes in respect of insurance premiums, 2s., because if we did not do that and we allowed a deduction of half the standard rate of Income Tax, the insured person would actually be getting a higher rate of deduction than the Income Tax he had actually paid.

Mr. CHURCHILL: Can the right hon. Gentleman say what is the saving or the increased yield of revenue?

Mr. SNOWDEN: I am sorry that I cannot give the exact figures, but I should think that it would not be material. I entirely agree with what the
hon. and gallant Member for Oxford said in regard to the importance of encouraging saving to life insurance.

Sir L. WORTHINGTON-EVANS: The Chancellor of the Exchequer has explained that this new principle is brought in for the purpose of preventing those who pay Income Tax at the lower rate receiving rebate in respect of insurance premiums at the higher rate, and that those who take up insurance shall not benefit by receiving in rebate on their premiums a larger sum than they have actually paid in Income Tax. If that is the only reason, it would be quite easy and proper to say that they should not be allowed to claim a rebate for more than they have paid in Income Tax. It would be literally simple. There must be many other cases besides the one case that the right hon. Gentleman has selected in which there is a variation. It is not all who would get back three-pence more. Some are being handicapped by paying one amount and receiving back a different one. It would be quite easy for the Exchequer to say: "We do not want to prejudice insurance and therefore we will allow a rebate up to the amount of Income Tax paid, and no more." No one could complain then.
The right hon. Gentleman ought to be very careful not to do anything to prejudice insurance. Insurance is a great advantage to the State. All these policies become part of the estate of the dead person when death occurs, and they pay Estate Duty on the amount insured. It would be penny wise and pound foolish in order to gain a few pounds per annum to lose hundreds of pounds of a capital sum in Death Duties. The Chancellor of the Exchequer has dealt with this matter as if it only applied to the people who are concerned with the 2s. 3d. rate. I may be wrong, because there have been so many alterations in the Finance Acts that it has been extraordinarily difficult to follow them, but surely in respect of some policies, in some ranges of income, much more than 2s. 3d. is allowed; the full tax is allowed. At any rate, it used to be so in the older policies. The right hon. Gentleman is dealing with the old policies as well as the others. The old policies, if I am right, are allowed, so
long as the premiums do not exceed one-sixth of the total income, to deduct the full amount.

Mr. SNOWDEN: It depends upon the man's income.

Sir L. WORTHINGTON-EVANS: I know that. Take the case of a person who is, say, paying £500 a year in insurance premiums, is he not entitled to 4s. in the pound upon that £500? The Chancellor of the Exchequer is saying that in future they are not to be entitled to the 4s. 6d., but they are only to be entitled to 4s. He is trying to prejudice these insured people to the extent of 6d. in the pound. The explanation which has been given by the right hon. Gentleman is not satisfactory, because he spoke as if the matter affected only the 2s. 3d. people. It is unwise and unfair when you have made a bargain with a certain set of insured people that you should now increase the taxation and deprive them of the appropriate rebate. It has never been done before. When the Income Tax was 4s. 6d. in the pound they were allowed the rebate in respect of the 4s. 6d., and the same applied when the Income Tax was 5s. in the pound and 6s. in the pound, and this principle is being thrown over, for the first time, by a Socialist Government.

Sir DONALD MACLEAN: It is unfortunate that I was not in the House when the Chancellor of the Exchequer was making his statement on this matter. I should like to support the attitude which my right hon. Friend the Member for St. George's (Sir L. Worthington-Evans) has taken in regard to the retrospective character of this proposal. I think it is a thoroughly wrong principle and one which ought not to be brought about in the way the Chancellor of the Exchequer suggests. Whatever may have been done in the past, we must stand the racket of it. The proposals of the future must, of course, have the full fruition which can be accomplished through the machinery of the Government, but unless there has been some attempt at deliberate fraud in the past in regard to this matter, I think that the very sound precedent which has been followed ought not to be broken. With regard to the other point, where there is a really substantial element of life
assurance, I think that the Chancellor of the Exchequer should be very careful not to take any action which would seriously affect that. But in the case of what are known as pure endowment policies over a term of five years, that undoubtedly is done with a view to the evasion of Surtax. I do not think there can be any doubt about that. On that question I think that the Chancellor of the Exchequer is taking a legitimate step in order to ensure that there is no evasion. In regard to policies of endowment for 20 years or 15 years, the position, of course, is different.

Sir WILLIAM DAVISON: I should like to know whether the Chancellor of the Exchequer is fully conscious of the fact that this will apply to policies prior to 1916. I have two sets of policies, and many other people have, which were taken out prior to 1916 and, provided that the amount of the policies are within one-sixth of the total income, the total amount of the premium has received the benefit of the rebate. These policies were taken out on that express condition at the time, and it is definitely going back on the assurance that was then given to the people who insured their lives in order that they should be given these special privileges. It was intended as an inducement to them, and it would be almost a piece of sharp practice if, in the case of these old policies, the Government went back on what has been the practice for many years.

Mr. A. M. SAMUEL: May I suggest that, in order to get over the difficulty from the point of view of the Exchequer and in order that a man may not get back anything more than he has to pay, let us put the matter as it was prior to the introduction of this Budget and compel the man to produce his receipt? If a man produces his receipt, I think that will meet the case from the point of view of the Chancellor of the Exchequer.

Mr. CHURCHILL: Surely we are going to have an answer from the Government on this matter, and on the very precise issue which has been raised by the discussion. The Chancellor of the Exchequer made a reasoned statement for having brought forward this Resolution. He gave a very clear reason, but it was not the reason, evidently, by which this
matter is actually governed. That is not very pleasant. The reason which the Chancellor of the Exchequer gave us was that, owing to the further restrictions of the zone of Income Tax payers, a certain class of persons would, if the law had been allowed to remain unaltered, have actually been receiving more than they would be called upon to pay. But now it is shown that by far the greater part of this tax will not fall on such persons, but on other persons who will be paying back at least what they receive. The pre-1916 part of this proposal touches the principle of retrospective action in regard to evasion, upon which definite decisions have been taken and the business of the country has preceded. The right hon. Gentleman says that he expects to get £500,000 from this—half a million a year. Now, by whom is this £500,000 going to be paid and on what process of our national life is it going to impinge? It is going to impinge as a deterrent upon the whole process of insurance. That is the intention and the object. The object has nothing whatever to do with these people between £250 and £225—

Mr. SNOWDEN: The right hon. Gentleman is getting somewhat wide of the point at issue. It is a question of 2s. 3d. instead of 2s.

Mr. CHURCHILL: The right hon. Gentleman was asked what this was worth to the revenue of the year. Can he answer that?

Mr. SNOWDEN: We are not dealing now with the whole subject. This Amendment is dealing with the difference between 2s. and 2s. 3d.

Mr. CHURCHILL: But the Resolution is dealing with the whole subject. I think it will be inconvenient to discuss it in parts. I place myself entirely under the protection of the Chair, but very often it is customary to allow a more or less general discussion on the first Amendment which raises a point in connection with the Resolution, and, basing myself upon that custom, as the matter has been raised, I say: Who is he getting the £500,000 from and upon what process of our national and economic life is this new tax to impinge? It is no use for the right hon. Gentleman to try and pretend that he can get away in a manner of this kind by trying to make the discussion
piecemeal, by trying to burke discussion, by having one fragment discussed on one Amendment and another fragment on another. Luckily, our procedure prevents that method from being entirely successful and I hope the House and the country will appreciate what is really intended. I ask the right hon. Gentleman whether he has imposed this duty with a view to obtaining £500,000 a year from the persons who have hitherto enjoyed the privileges granted to them in connection with insurance. If he is, surely, he is taking a very injurious course, and I do not wonder that my right hon. Friend the Member for Northern Cornwall (Sir D. Maclean) was moved to make a qualified protest upon this subject. As my right hon. Friend the Member for St. George's (Sir L. Worthington-Evans) pointed out, these very insurance policies all come into the purview of the death duties. They are an aggregative tax on the estate which falls in at death.
The process of insurance is surely one which from every point of view, except that of "the road to ruin," should be encouraged by the Government. People make sacrifices to insure their lives in case, owing to the chances, and ups and downs of their walk of life and their employment, they should be cut off at a moment when their families would be left in circumstances of great embarrassment, involving a complete alteration in their mode of life. They make great sacrifices year after year and thereby immense funds are steadily gathered, which funds constitute one of the few processes of collective saving now at work in this country. Hon. Gentlemen opposite may try to sweep away private savings. They may declare that wealth is not to be allowed above a certain scale or standard. But I imagine that they will allow the process of collective saving to proceed. Here is a process of securing vast sums which the State has thought it right and necessary to protect and now the right hon. Gentleman is coming to break in upon this process. Even on their awn dismal theories is that a proposal with which hon. Members opposite agree? It is, from his own point of view, the most short-sighted policy that he could adopt. I should have thought that the encouragement of insurance policies was one of the most necessary elements in a wise treatment
of British finances at the present time. We see the enormous advantage of this method. We are a nation which has carried insurance in the industrial and social spheres to incomparably higher levels than any other country in the world. Then why should the right hon. Gentleman strike this blow? Is it really worth it?
Of course, the taxpayer is the victim. He is to be left on the rack. If the right hon. Gentleman is to be judged by the efficiency with which he can screw the last bit out of the taxpayer then, on that principle, he would, indeed, be blameworthy if he rejected such a very ingenious little extra turn of the screw as is here proposed. But, on another principle, to a Chancellor of the Exchequer who desires to see the whole forces of this country gaining in strength apart from the individual, such a proposal is most short-sighted and most ill-motived. I hope we are going to hear from the President of the Board of Trade who has, I see, been brought into this discussion, and who has considerable departmental responsibility in regard to the progress of insurance in this country, some statement to the effect that the Government will reconsider this matter. It really is not worth while. What you gain in the £500,000 a year will probably inflict discouragement upon the actual practice of insurance and will make a loss in the ultimate yield years hence which will far exceed the gain to the revenue. Why break in upon the principles which has been established in regard to these premiums? What is the point of breaking in upon that principle for such a paltry advantage as that which has been described?
I ask the President of the Board of Trade to say that the matter will be reviewed and reconsidered. We are quite aware of the fact that, ploughing with borrowed oxen, the Government have the power to carry it in any form they like. One of the oxen looks like giving at the moment, but, no doubt, the goad, accurately applied, will stir him into his wonted activity. We know all that, but the fact remains that the right hon. Gentleman is doing this quite needlessly. I admit that he has enormous difficulties to face and that in facing them he must necessarily run
counter to a great many elements in the nation but in this case he is quite needlessly broadening the irritation and the burden which his Budget, inflicts, by casting into it—for what is an inconceivably small sum of money compared with the problem which he has to meet—the whole wide area of these policies of insurance.

The PRESIDENT of the BOARD of TRADE (Mr. William Graham): I think it is quite unnecessary, if I may say so with respect, to follow the right hon. Gentleman the Member for Epping (Mr. Churchill) in the spectacular turn which he has given to this discussion because like all matters of taxation, and indeed everything else, it comes back quite simply to the plain facts and the facts in this case are overwhelmingly on the side of my right hon. Friend the Chancellor of the Exchequer. Perhaps the House will bear with me if in order to try to clarify the issue I summarise what I understand to have been the position under the Finance Act, 1916. As hon. Members have already pointed out in the case of policies existing at the passing of the Act of 1916, an allowance is made in respect of insurance premiums on incomes of £1,000 per annum equal to one-half of the standard rate; on incomes between £1,000 and £2,000 equal to three-quarters of the standard rate, and on incomes above £2,000 equal to the full standard rate of tax.
Under that Act changes were introduced and as regards insurance premiums on policies after 22nd June, 1916, the allowance now given is not more than one-half of the standard rate of tax subject always to the condition that the premiums paid would never exceed for this purpose one-sixth of the income of the individual. As I understand it, there is no difference of opinon between us as regards the lower ranges of income. My right hon. Friend the Chancellor of the Exchequer and my hon. Friend the Financial Secretary to the Treasury have, I understand, explained to the House that in view of the change and the policy of maintaining the rate at 2s. in the pound on the first £250 of taxable income it would be utterly wrong to give relief at a greater rate in respect of insurance premiums, because then an allowance would be given in respect of those premiums at a rate higher than that
which was actually being charged, and, accordingly, as regards the majority of people who are entitled to that concession there is not any dispute before the House.
But, the right hon. Gentleman, and, apparently, other speakers as well, have suggested that there is some disadvantage to other classes of incomes in that we do not maintain as regards pre-22nd June, 1916, policies, concessions either at one-half or three-quarters or the full standard rate. In taking a line like that they have omitted to observe that all incomes will enjoy the concession which is given in regard to the first £250 which is taxable. The allowance in that case is at the old rate. That is without alteration, and the position is exactly maintained for those people as it is for the smaller ranges of income. If allowance is made under that head in respect of people enjoying higher incomes, it is, of course, a substantial consideration, and up to approximately £2,000 per annum I do not think that by and large there is any appreciable alteration. Some may pay a little less, others just a fraction more, but no one can contend that he is prejudiced in any way.
The right hon. Gentleman now argues almost with ferocity that there is some injury to the people above that level, and he thinks that this proposal is breaking a bargain entered into between the State as the taxing authority and the people who are getting these Income Tax concessions in relation to insurance premiums. It is true that to some extent they are at a small disadvantage, but it is only a small disadvantage, and, in any case, any Chancellor of the Exchequer is always within his rights in altering the law for reasons of finance, more particularly if he is satisfied that

over the whole range of the subjects justice and even generosity have been extended. The law as I have said was changed in 1916. The allowances at the full standard rate at three-quarters and at half of the standard rate apply only to then existing policies, and the maximum allowance in regard to any class of policy after June, 1916, became one-half of the standard rate, with that qualifying conditions to which I have referred regarding the aggregate amount of premiums as applied to Income Tax. I see not the slightest ground for the charge of going back upon a bargain, and, for those reasons, I am satisfied that no injustice has been done, and that the Amendment must be resisted.

Sir AUSTEN CHAMBERLAIN: One thing the right hon. Gentleman has made perfectly clear, and that is that what purported to be the explanation of the Chancellor of the Exchequer on this proposal was no explanation at all. What the right hon. Gentleman the Chancellor of the Exchequer dealt with was the smallest part of the change which he is making, while the larger part, has been, per incuriam, if not intentionally, concealed from the House. When the Chancellor of the Exchequer was questioned about the pre-1916 policies, he said that matter was not dealt with in the Amendment, and he refrained from any explanation. I propose to accept the challenge which the right hon. Gentleman tacitly threw out, and as soon as this Amendment has been disposed of I will move an Amendment to deal with the pre-1916 policies.

Question put, "That those words be there inserted."

The House divided: Ayes, 154; Noes, 259.

Division No. 272.]
AYES.
[4.58 p.m.


Acland-Troyte, Lieut.-Colonel
Bowater, Col. Sir T. Vansittart
Churchill, Rt. Hon. Winston Spencer


Albery, Irving James
Bowyer, Captain Sir George E. W.
Cockerill, Brig.-General Sir George


Allen, Sir J. Sandeman (Liverp'l., W.)
Bracken, B.
Cohen, Major J. Brunel


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Briscoe, Richard George
Colfox, Major William Philip


Astor, Viscountess
Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Colville, Major D. J.


Atholl, Duchess of
Buchan, John
Courthope, Colonel Sir G. L.


Atkinson, C.
Buckingham, Sir H.
Crichton-Stuart, Lord C.


Baldwin, Rt. Hon. Stanley (Bewdley)
Bullock, Captain Malcolm
Cranborne, Viscount


Balniel, Lord
Castle Stewart, Earl of
Crookshank, Capt. H. C.


Beamish, Rear-Admiral T. P. H.
Cautley, Sir Henry S.
Culverwell, C. T. (Bristol, West)


Beaumont, M. W.
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Cunliffe-Lister, Rt. Hon. Sir Philip


Betterton, Sir Henry B.
Chadwick, Sir Robert Burton
Dalrymple-White, Lt.-Col. Sir Godfrey


Bevan, S. J. (Holborn)
Chamberlain, Rt. Hn. Sir J. A. (Blrm., W.)
Davies, Dr. Vernon


Birchall, Major Sir John Dearman
Chamberlain, Rt. Hon. N. (Edgbaston)
Davies, Maj. Geo. F. (Somerset, Yeovil)


Bird, Ernest Roy
Chapman, Sir S.
Davison, Sir W. H. (Kensington, S.)


Bourne, Captain Robert Croft.
Christie, J. A.
Duckworth, G. A. V.


Dugdale, Capt. T. L.
James, Lieut.-Colonel Hon. Cuthbert
Ross, Major Ronald D.


Eden, Captain Anthony
Jones, Henry Haydn (Merioneth)
Ruggles-Brise, Lieut.-Colonel E. A.


Edmondson, Major A. J.
King, Commodore Rt. Hon. Henry D.
Salmon, Major I.


Elliot, Major Walter E.
Knox, Sir Alfred
Samuel, A. M. (Surrey, Farnham)


England, Colonel A.
Lamb, Sir J. O.
Samuel, Samuel (W'dsworth, Putney)


Erskine, Lord (Somerset, Weston-s-M.)
Law, Sir Alfred (Derby, High Peak)
Sandeman, Sir N. Stewart


Everard, W. Lindsay
Leighten, Major B. E. P.
Savery, S. S.


Falle, Sir Bertram G.
Lewis, Oswald (Colchester)
Skelton, A. N.


Ferguson, Sir John
Llewellin, Major J. J.
Smith, Louis W. (Sheffield, Hallam)


Fermoy, Lord
Locker-Lampson, Rt. Hon. Godfrey
Smith-Carington, Neville W.


Fison, F. G. Clavering
McConnell, Sir Joseph
Smithers, Waldron


Ford, Sir P. J.
Macquisten, F. A.
Spender-Clay, Colonel H.


Galbraith, J. F. W.
MacRobert, Rt. Hon. Alexander M.
Stanley, Lord (Fylde)


Ganzoni, Sir John
Makins, Brigadler-General E.
Stanley, Maj. Hon. O. (W'morland)


Gault, Lieut.-Col. Andrew Hamilton
Margesson, Captain H. D.
Steel-Maitland, Rt. Hon. Sir Arthur


Gilmour, Lt.-Col. Rt. Hon. Sir John
Marjoribanks, E. C.
Stuart, Hon. J. (Moray and Nairn)


Glyn, Major R. G. C.
Meller, R. J.
Sueter, Rear-Admiral M. F.


Grace, John
Mitchell, Sir W. Lane (Streatham)
Tinne, J. A.


Graham, Fergus (Cumberland, N.)
Monsell, Eyres, Com. Rt. Hon. Sir B.
Todd, Capt. A. J.


Grattan-Doyle, Sir N.
Morrison, W. S. (Glos., Cirencestar)
Train, J.


Gunston, Captain D. W.
Muirhead, A. J.
Vaughan-Morgan, Sir Kenyon


Hall, Lieut.-Col. Sir F. (Dulwich)
Newton, Sir D. G. C. (Cambridge)
Wallace, Capt. D. E. (Hornsey)


Hammersley, S. S.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Wardlaw-Milne, J. S.


Hanbury, C.
O'Neill, Sir H.
Warrender, Sir Victor


Hannon, Patrick Joseph Henry
Ormsby-Gore, Rt. Hon. William
Waterhouse, Captain Charles


Haslam, Henry C.
Peake, Captain Osbert
Wayland, Sir William A.


Henderson, Capt. R. R. (Oxf'd, Henley)
Peto, Sir Basil E. (Devon, Barastaple)
Wells, Sydney R.


Hennessy, Major Sir G. R. J.
Pilditch, Sir Philip
Wilson, G. H. A. (Cambridge U.)


Hills, Major Rt. Hon. John Waller
Pownall, Sit Assheton
Windsor-Clive, Lieut.-Colonel George


Hope, Sit Harry (Forfar)
Preston, Sir Walter Rueben
Wolmer, Rt. Hon. Viscount


Horne, Rt. Hon. Sir Robert S.
Purbrick, R.
Wood, Rt. Hon. Sir Kingsley


Howard-Bury, Colonel C. K.
Ramsbotham, H.
Worthington-Evans, Rt. Hon. Sir L.


Hudson, Capt. A. U. M. (Hackney, N.)
Rawson, Sir Cooper



Hunter-Weston, Lt.-Gen. Sir Aylmer
Remer, John R.
TELLERS FOR THE AYES.—


Hurd, Percy A.
Rentoul, Sir Gervals S.
Sir George Penny and Marquess


Hurst, Sir Gerald B.
Roberts, Sir Samuel (Ecclesall)
of Titchfield.


Iveagh, Countess of
Rodd, Rt. Hon. Sir James Rennell



NOES.


Adamson, Rt. Hon. W. (Fife, West)
Daggar, George
Hastings, Dr. Somerville


Adamson, W. M. (Staff., Cannock)
Dallas, George
Haycock, A. W.


Addison, Rt. Hon. Dr. Christopher
Davies, E. C. (Montgomery)
Hayday, Arthur


Aitchison, Rt. Hon. Craigle M.
Davies, Rhys John (Westhoughton)
Hayes, John Henry


Alexander, Rt. Hon. A. V. (Hillsbro')
Day, Harry
Henderson, Thomas (Glasgow)


Alpass, J. H.
Denman, Hon. R. D.
Henderson, W. W. (Middx., Enfield)


Ammon, Charles George
Dickson, T.
Herriotts, J.


Arnott, John
Dudgeon, Major C. R.
Hirst, G. H. (York W. R. Wentworth)


Aske, Sir Robert
Dukes, C.
Hirst, W. (Bradford, South)


Ayles, Walter
Ede, James Chuter
Hoffman, P. C.


Baker, John (Wolverhampton, Bilston)
Edmunds, J. E.
Hollins, A.


Baldwin, Oliver (Dudley)
Edwards, E. (Morpeth)
Hopkin, Daniel


Barnes, Alfred John
Egan, W. H.
Horrabin, J. F.


Barr, James
Elmley, Viscount
Hudson, James H. (Huddersfield)


Batey, Joseph
Foot, Isaac
Hunter, Dr. Joseph


Beckett, John (Camberwell, Peckham)
Freeman, Peter
Hutchison, Maj.-Gen. Sir R.


Bellamy, Albert
Gardner, B. W. (West Ham, Upton)
Isaacs, George


Bennett, Captain E. N. (Cardiff, Central)
Gardner, J. P. (Hammersmith, N.)
Jenkins, W. (Glamorgan, Neath)


Benson, G.
George, Major G. Lloyd (Pembroke)
John, William (Rhondda, West)


Bevan, Aneurin (Ebbw Vale)
George, Megan Lloyd (Anglesea)
Johnston, Thomas


Birkett, W. Norman
Gibbins, Joseph
Jones, F. Llewellyn- (Flint)


Blindell, James
Gibson, H. M. (Lancs, Mossley)
Jones, J. J. (West Ham, Silvertown)


Bondfield, Rt. Hon. Margaret
Gill, T. H.
Jones, Morgan (Caerphilly)


Bowerman, Rt. Hon. Charles W.
Gillett, George M.
Jones, T. I. Mardy (Pontypridd)


Broad, Francis Alfred
Glassey, A. E.
Jowett, Rt. Hon. F. W.


Brockway, A. Fenner
Gossling, A. G.
Jowitt, Rt. Hon. Sir W. A.


Bromfield, William
Gould, F.
Kennedy, Thomas


Bromley, J.
Graham, D. M. (Lanark, Hamilton)
Kinley, J.


Brooke, W.
Graham, Rt. Hon. Wm. (Edin., Cent.)
Knight, Holford


Brown, Rt. Hon. J. (South Ayrshire)
Granville, E.
Lambert, Rt. Hon. George (S. Molton)


Burgess, F. G.
Gray, Milner
Lang, Gordon


Buxton, C. R. (Yorks, W. R. Elland)
Greenwood, Rt Hon. A. (Colne).
Lansbury, Rt. Hon. George


Buxton, Rt. Hon. Noel (Norfolk, N.)
Grenfell, D. R. (Glamorgan)
Lathan, G.


Caine, Derwent Hall-
Griffith, F. Kingsley (Middlesbro' W.)
Law, A. (Rosendale)


Cameron, A. G.
Griffiths, T. (Monmouth, Pontypool)
Lawrence, Susan


Cape, Thomas
Groves, Thomas E.
Lawson, John James


Carter, W. (St. Pancras, S. W.)
Grundy, Thomas W.
Lawther, W. (Barnard Castle)


Chater, Daniel
Hall, F. (York, W. R., Normanton)
Leach, W.


Church, Major A. G.
Hall, G. H. (Merthyr Tydvil)
Lee, Frank (Derby, N. E.)


Cluse, W. S.
Hall, Capt. W. P. (Portsmouth, C.)
Lee, Jennie (Lanark, Northern)


Cocks, Frederick Seymour
Hamilton, Mary Agnes (Blackburn)
Lees, J.


Collins, Sir Godfrey (Greenock)
Hamilton, Sir R. (Orkney & Zetland)
Lindley, Fred W.


Compton, Joseph
Hardle, George D.
Lloyd, C. Ellis


Cowan, D. M.
Harris, Percy A.
Logan, David Gilbert




Longbottom, A. W.
Phillips, Dr. Marion
Snowden, Rt. Hon. Philip


Longden, F.
Picton-Turbervill, Edith
Snowden, Thomas (Accrington)


Lunn, William
Pole, Major D. G.
Sorensen, R.


McEntee, V. L.
Potts, John S.
Stamford, Thomas W.


Mackinder, W.
Price, M. P.
Stewart, J. (St. Rollox)


McKinlay, A.
Pybus, Percy John
Strachey, E. J. St. Loe


MacLaren, Andrew
Ramsay, T. B. Wilson
Strauss, G. R.


Maclean, Sir Donald (Cornwall, N.)
Raynes, W. R.
Sullivan, J.


Maclean, Nell (Glasgow, Govan)
Richardson, R. (Houghton-le-Spring)
Taylor, W. B. (Norfolk, S. W.)


MacNeill-Weir, L.
Riley, Ben (Dewsbury)
Thomas, Rt. Hon. J. H. (Derby)


Macpherson, Rt. Hon. James I.
Riley, F. F. (Stockton on-Tees)
Thorne, W. (West Ham, Plaistow)


McShane, John James
Ritson, J.
Thurtle, Ernest


Malone, C. L'Estrange (N'thampton)
Roberts, Rt. Hon. F. O. (W. Bromwich)
Tillett, Ben


Mander, Geoffrey le M.
Romeril, H. G.
Tinker, John Joseph


Mansfield, W.
Rosbotham, D. S. T.
Trevelyan, Rt. Hon. Sir Charles


March, S.
Rothschild, J. de
Turner, B.


Markham, S. F.
Rowson, Guy
Vaughan, D. J.


Marley, J.
Russell, Richard John (Eddisbury)
Viant, S. P.


Marshall, Fred
Salter, Dr. Alfred
Walkden, A. G.


Mathers, George
Samuel, Rt. Hon. Sir H. (Darwen)
Walker, J.


Matters, L. W.
Samuel, H. W. (Swansea, West)
Watkins, F. C.


Melville, Sir James
Sanders, W. S.
Watson, W. M. (Dunfermline)


Millar, J. D.
Sandham, E.
Wellock, Wilfred


Milner, Major J.
Sawyer, G. F.
Welsh, James (Paisley)


Montague, Frederick
Scrymgeour, E.
Welsh, James C. (Coatbridge)


Morley, Ralph
Scurr, John
West, F. R.


Morris, Rhys Hopkins
Shaw, Rt. Hon. Thomas (Preston)
Westwood, Joseph


Morris-Jones, Dr. J. H. (Denbigh)
Shepherd, Arthur Lewis
Wheatley, Rt. Hon. J.


Morrison, Herbert (Hackney, South)
Sherwood, G. H.
Whiteley, Wilfrid (Birm., Ladywood)


Morrison, Robert C. (Tottenham, N.)
Shield, George William
Whiteley, William (Blaydon)


Mort, D. L.
Shillaker, J. F.
Wilkinson, Ellen C.


Moses, J. J. H.
Shinwell, E.
Williams, David (Swansea, East)


Mosley, Lady C. (Stoke-on-Trent)
Short, Alfred (Wednesbury)
Wilson, C. H. (Sheffield, Attercliffe)


Muff, G.
Simmons, C. J.
Wilson, J. (Oldham)


Murnin, Hugh
Simon, E. D. (Manch'ter, Withington)
Wilson, R. J. (Jarrow)


Nathan, Major H. L.
Sinclair, Sir A. (Caithness)
Winterton, G. E. (Leicester, Loughb'gh)


Newman, Sir R. H. S. D. L. (Exeter)
Sinkinsen, George
Wise, E. F.


Oldfield, J. R.
Smith, Alfred (Sunderland)
Wood, Major McKenzie (Banff)


Oliver, George Harold (Ilkeston)
Smith, Ben (Bermondsey, Rotherhithe)
Young, R. S. (Islington, North)


Owen, Major G. (Carnarvon)
Smith, Frank (Nuneaton)



Palin, John Henry
Smith, H. B. Lees- (Keighley)
TELLERS FOR THE NOES.—


Parkinson, John Allen (Wigan)
Smith, Rennie (Penistone)
Mr. Charles Edwards and Mr.


Perry, S. F.
Smith, Tom (Pontefract)
Paling.


Pethick-Lawrence, F. W.
Snell, Harry

Sir A. CHAMBERLAIN: I beg to move, in line 6, at the end, to insert the words:
Provided that this amendment shall not apply to policies taken out before the twenty-second day of June, nineteen hundred and sixteen.
5.0 p.m.
As I understand the explanation offered by the Government, and in particular by the President of the Board of Trade, the Resolution will not adversely affect other policies than those. By the accident of Debate we elicited the fact that it would adversely affect policies taken out before 1916, which had been specifically safeguarded by previous Acts. The Chancellor of the Exchequer said that the sum of money at stake was negligible as far as the revenue is concerned, amounting to about half a million, but obviously that half a million, or the major part of it, is coming, not in refraining from overpaying on the insurance policies of small incomes. The opportunity is being taken to re-open a bargain made with policy owners before 1916.
I move this Amendment for the purpose of offering the Chancellor of the Exchequer an opportunity of making an explanation to the House. It is a remarkable thing that he should have made an explanation of his Resolution and that from first to last not one single word was said on the major proposition contained in it. He took cover in an explanation that it was only to protect the revenue against paying out sums at large. The House is entitled to a further explanation, and I think the Chancellor of the Exchequer himself would wish to give it, of the part of the proposal concerned. I submit that it is doubly inexpedient and impolitic to go back on the arrangement made in respect of policies taken out before 1916.
I am not sure that if we were reviewing the whole subject impartially and coolly we should not find that it was in the public interest to revert to the pre-1916 policy in respect of any new insurance to be taken out hereafter, rather than to restrict the rights which were accorded to the pre-1916 policy holder.
What has happened to him in the interval? The expenditure of the State has gone up enormously, the burden of our debt has risen, the demands upon his current income have risen proportionately, his power of spending money has diminished, and the inducements to save have been diminished by the sums you take out of his revenue and by the increased sums you take out of his estate when he dies; and that increased sum taken out of his estate is calculated on the estate, plus the capital amount for which he had insured. Therefore, the more he insured his life, the heavier is the debt his estate has to pay.
Death Duties have become a very important part of our financial system. Hitherto, whatever has happened, they have risen steadily. When other revenues have been disappointing they have exceeded the expectations of the Chancellor of the Exchequer. They are, therefore, a most valuable source of revenue to the State. They should be carefully guarded. Are you guarding them? Are you continuing the restrictions which were imposed when these duties were introduced and when the burdens imposed on those who took out policies of insurance were less heavy? Would you not be wise, as you increase the burden of the Death Duties, to encourage the life insurers who preserve or create the capital which is required to feed your revenue? On grounds of high policy I submit that the step you are taking is not only one which ought not to be taken, but is clearly a step in the wrong direction.
The second point I would suggest to the House is no less worthy of consideration. In matters of this kind we surely ought to be careful to keep faith with the taxpayer. We revise our rates for the future. We alter Income Tax from year to year and we may alter Death Duties from year to year, but we levy them from that day forward at the new rate. We do not go back. Here are insurance policies which people were encouraged to make because it was in the interests of the State that they should make them. When for reasons which seemed good to the Chancellor of the Exchequer of the day, those terms were withdrawn from future insurance, he felt it improper to break the terms of a bargain which the other party had already
made, from which he could not extricate himself, by which he continued bound, and he therefore excluded the pre-1916 policies.
The Chancellor of the Exchequer has taken steps to prevent the revenue being defrauded. He has taken steps which will secure that he never repays more than has been paid by the recipient; it is to be a repayment and nothing more. Cannot he be content with that, in view of the new importance of the Death Duties, and the immense interest of the State in getting people to conserve capital, so that it may not only feed industry at the present time, but may feed the revenue in the future, and so that his successors may draw the same revenue, or a greater amount, from Death Duties than he or his predecessors? If he is not prepared to give further encouragement in that direction, at least I ask him to keep faith with those who have made a bargain, being encouraged thereto by the State, and being offered certain terms by the State in order to make it, now that they are bound by their bargain and cannot be relieved from it.

Mr. P. SNOWDEN: The right hon. Gentleman stated six times that I had attempted deliberately to mislead the House when I spoke on the Amendment of the hon. and gallant Member for Oxford (Captain Bourne).

Sir A. CHAMBERLAIN: I stated that the right hon. Gentleman had done it per incuriam, or deliberately. I am awaiting his explanation.

Mr. SNOWDEN: My explanation has already been given. I pointed out that I was dealing with the Amendment of the hon. and gallant Member for Oxford (Captain Bourne). The right hon. Gentleman has had a long Parliamentary experience, and he knows that, when a specific question is before the House, it is the duty of the Government to deal with that specific question and with no other question. There was no Amendment on the Paper dealing with the matter which has been raised on the Amendment which the right hon. Gentleman has now moved. It is nearly a month since the introduction of the Budget. The Opposition have had weeks in which to consider these Resolutions. No Amendment has been put down, and, therefore, if I had been in order in dealing with the whole Resolution on the Amendment of
the hon. and gallant Member for Oxford, I might safely have assumed that the Opposition were aware of the effect that the Resolution would have upon the pre-1916 policies, and that they raised no objection to it.

Mr. CHURCHILL: Is that the explanation?

Mr. SNOWDEN: That is the explanation. I do not expect that it will be satisfactory. The right hon. Gentleman said that his Amendment raises the most important part of the whole Resolution. In that he is wholly mistaken. The amount involved by the suggested alteration in the rates of allowance on the pre-1916 policies affects but a relatively small number of the total policies in existence, and the rates which it is proposed to substitute for those in the Act of 1916 will not affect any person with an income below £2,000 a year and an insurance premium of, I think—I forget the exact figure—about £237 a year.

Sir L. WORTHINGTON-EVANS: What is the total loss?

Mr. SNOWDEN: Between one-quarter and one-third of the £500,000. The right hon. Gentleman devoted another part of his speech to preaching the virtue of the encouragement of thrift, but what relation has that to this proposal? All of these pre-1916 policies have already been taken out. [Interruption.] Any policies which were taken out after 1916, or which will be taken out in the future, are affected by the other part of the allowance, and that is an allowance which, as my right hon. Friend the President of the Board of Trade pointed out, does not seem to be opposed by the party opposite. Therefore, there can be no discouragement of thrift in that respect. The point has been made by the right hon. Gentleman that we have broken some contractual undertaking, but that is not the case. The changes were made by the Act of 1916 in the rates of allowance for Income Tax purposes. [HON. MEMBERS: "Pre-1916!"] An alteration was made in the rates of allowances for insurance, but, surely, the party opposite is not going to maintain that, in matters affecting taxation and revenue, future Governments are going to be bound by any particular conditions that may have been incorporated in a Finance Bill previously—

HON. MEMBERS: Speak up!

Sir W. DAVISON: Then you could alter the interest on the War Loan. It is the same thing.

Mr. SNOWDEN: The position is precisely as affected by a change of Income Tax, and that is the point that I was leading up to. The rates of deduction that will now be given on the pre-1916 policies are based upon an Income Tax of 4s. in the £; that is to say, under this Resolution, the relief in respect of these policies will not be granted at the rates of 2s. 3d., 3s. 4½d. and 4s. 6d., but will be based upon an Income Tax of 4s. in the £, and that is precisely what we are doing in the case of the post-1916 policies. Therefore, there is a relation between them; we are doing the same thing in regard to both classes of policy; and I think we are perfectly justified in doing that, because it must be remembered also that all people who are going to be affected by this suggested change in the rate of deduction upon pre-1916 policies get the full allowance upon the £250, that is to say, the 2s. rate of allowance, paying only 2s. in the £ on £250 of their income, and that, in the great majority of cases, is more than compensation for anything extra that they would be called upon to pay or that they would lose by the slightly reduced allowance for life insurance policies. The imputation that the right hon. Gentleman made was quite unjustified. I had not the slightest intention at all of withholding anything from the House. I confined myself simply to the matter before the House, and I regret that the right hon. Gentleman should have made such an imputation on my good faith.

Sir D. MACLEAN: I am quite sure that no one thought for a moment that the Chancellor of the Exchequer was trying to mislead the House. He was addressing himself quite definitely to the particular point with which he had to deal. With regard to this Amendment, I hope that he will see that there is something more in it than he has put before the House. I would like to suggest one or two things to him. In the first place, it is very small in amount. As I understand it, the revenue will not be damnified to a greater extent than something like £150,000. In the second place—and this is much more important than the amount—you are dealing with a class of
insurance policy holders who in the past have been accorded specific protection, and it is now proposed to take that protection from them. I suggest very respectfully to the Chancellor of the Exchequer that it is a bad thing to create the impression in the minds, not only of these special taxpayers, but of the public at large, that it is intended to sweep away these, I will not say privileges, but acts of justice, which the House has decided upon from time to time.
I would make an appeal to the Chancellor of the Exchequer. I may say that I voted for him in the last Division, and, therefore, I am in a position of detachment, if I may say so, from the interchange of, I will not say expletives, but vigorous references between the two Front Benches. This is a matter of considerable importance, and I would urge upon the Chancellor of the Exchequer that it is one in which he could quite well give way. His doing so will not affect his revenue, but it will give a sense of security and of continuity which I think is very important, especially in this matter of taxation. Further, I feel very strongly indeed upon this question of life insurance. It is of real and vital importance that this House should do nothing to discourage those who are insuring their lives against the very heavy imposts which fall upon their estates when they die. It is an enormous advantage to the revenue and to the Government of the day to have the cash ready, practically speaking, when the debt accrues. Small as this matter is, it may carry with it a very large amount of discouragement and distrust, and, from the point of view, not of the £150,000 which may be lost here or there, but of the much larger question of policy, I venture to appeal to the Chancellor of the Exchequer to put on one side all the decisions that have been made, and to meet a really substantial point by giving way in regard to this Amendment.

Lieut.-Colonel Sir GODFREY DALRYMPLE-WHITE: The Chancellor's speech has only made the matter worse. His defence is that this concerns only a small proportion of those who have taken out pre-1916 policies. He, therefore, laid down the axiom that, in the opinion of the Socialist Government, there is a different code of honour as regards
majorities from what there is when you are dealing with minorities. It has been emphasised in several speeches that the matter of life insurance is a thing that was almost pressed upon people before the War, and in the early part of the War. It was done not only from the point of view of encouraging saving, but to assist the Government so that, when the Death Duties had to be collected, there would be the money ready to their hand. Many people insured their lives on that condition only, laying up for Death Duties. Many times afterwards, during the heavy taxation period of the last part of the War and afterwards, I have had to sell out capital to pay insurance premiums, and I think it is nothing more than a gross breach of faith to make an agreement with people to do this and to withdraw it 15 years afterwards. I think, if the Chancellor or I did that sort of thing in civil life, we should find ourselves in the law courts.

Sir W. DAVISON: In the 12 years that I have been a Member of the House I have never yet heard a statement by a person in the position of the Chancellor of the Exchequer such as that which the right hon. Gentleman has addressed to the House. He said that this will not affect future thrift, as all these policies have been taken out and we cannot expect to get any more out of these people. The statement is monstrous. I interjected that it was equivalent to the right hon. Gentleman saying he is by no means bound to keep the same rate of interest at which people were asked to subscribe to War Loan. If you break faith with people who took out policies for insurance prior to 1916, the same argument applies to people who subscribed to War Loan at a certain rate of interest, and you may say it is not convenient, in the present state of the national finances, to pay so much. If you are entitled to break one, you are entitled to break the other.
The argument of members of the Liberal party is very much on a par. They say that this is only a little matter. What difference does it make if it is a breach of faith? It does not matter whether it is big or little. If you have made an agreement with the taxpayer, that if he takes out an insurance he will get certain allowances, you have no right to go behind that. I cannot believe that
the right hon. Gentleman really meant what he said, but was inspired on the spur of the moment into somewhat hasty words. I hope, in the interests of the government of this country, and especially in the interest of the national finances, the Chancellor will stick to what has been understood to be a national obligation and will not go back on assurances that were given to people who took out life insurance prior to 1916.

Mr. JOHN BAKER: I feel that there is something wrong about the assertions of hon. Members opposite. They have stated that policies taken out pre-1916 were entitled to certain privileges, and that policies taken out at a later date come under a different set of privileges. We are told this House has made a contract with insured persons. Those statements are not accurate. I do not want to say that they are not true, because the whole matter is so technical and so detailed that it is only those who are administering who have a million to one chance of understanding the matter clearly. I have had half a dozen insurance policies. They were all taken out prior to 1916. My income has never been, and is not now, £2,000 a year. The amount of insurance was not one-sixth of my annual income. I ought to have had relief at the full rate of tax. I have never had it. [Interruption.] Then you are wrong if I am right.
If my memory serves me rightly, when you get your Income Tax form, you are warned that you are entitled to receive an allowance, but the deduction will not exceed 2s. 3d. in the £ on policies taken out by a person with less than £2,000 a year prior to 1916, and, according to hon. Members opposite, they ought to be entitled to the full rate. Up to 1923 I thought I knew a good deal about this business, but I changed my occupation in that year and have lost touch. To-day, when we are dealing with two codes of honour, the assertion is made by hon. Members opposite that this matter was altered in 1918. Some of them were in this House and they gave a privilege to people with £2,000 that they would not give to people with less than £2,000. They say we want to break faith with the taxpayer. The taxpayer is reminded by at least the decent insurance officers, if not by all, that there can be relief on
premiums paid. It is in some relation to the current rate of Income Tax under certain conditions, but, in the calculations one sees of what is likely to be the value of an endowment policy at the end of a given number of years, the decent offices at least draw attention to the fact that this is provided the Income Tax remains at 4s. in the £. There is no illusion, in the opinion of the managers of decent insurance offices, that this House has the right to regulate this matter in any succeeding Budget. The party opposite claimed the right in 1918 to do the same thing. If my memory serves me rightly, there were further differences made in 1921 and 1923. I wish hon. Members opposite would look up their facts before they talk about our being wrong. They have been barking up the wrong tree all the afternoon. It was they who swindled people with low incomes and gave privileges to those with big incomes.

Sir ASSHETON POWNALL: I want to put this from the point of view of the Treasury. I do not believe that, in order to get £100,000 or £150,000, it is worth while for the Treasury to re-open the question of the pre-1916 policies. Death Duties were appreciably increased in 1919 and in 1925, and they are now being materially increased again in 1930. It is the only form of taxation that has been increased three times since the War. They have been paid loyally by these wealthy people who have these large sums behind them, but there comes a limit to human endurance. The remedy is perfectly simple and perfectly legal. All the wealthy man has to do when he is getting on in life is to hand over an appreciable proportion of his property to his heirs and successors. It is done by members of all parties, and the stiffer you make your Death Duties, the greater is the encouragement to do it. When you give a legitimate grievance to those who have taken out policies prior to 1916 you unsettle to some extent the minds of these wealthy individuals, who are worth something like £60,000 a year to the State. That is about the amount we get in Death Duties. Is it worth while, for the sake of £150,000 a year, to unsettle not only the pre-1916 policy people, but also those who may be taking out policies in the future? From the
Treasury point of view, I do not think the right hon. Gentleman will be well advised in pressing the matter any further.

Mr. JOHN JONES: Not being an expert in insurance, I can only speak from the standpoint of those who are not insured. My only insurance depends on the fact that I am a member of the superannuation fund of my own union. That is enough to provide me with all I want, because I am afraid that when I go to the next world my money will all melt. But I am going to leave behind me all my responsibilities—grown up. I cannot for the life of me understand the trepidation of hon. Members opposite regarding the taxes they have to pay. Give me your income and I will rush and pay more. We are asking you to realise that, in order to get a paltry sum of money, we are going to tax the people who have got it. The proper policy, according to the philosophy expressed opposite, is, "Take it from the people who have not got it and leave us alone. Tax everyone who has not got much, but leave alone those who have got everything, particularly if they have done less for it." Why should they worry about the Death Duties? When I am dead—

Mr. DEPUTY-SPEAKER (Mr. Dunnico): The Question before the House is not the Death Duties at all.

Mr. JONES: Other Members have referred to the Death Duties, and I thought they were going to die whilst they were referring to them. They had tears in their voices. What is going to happen to them if they are not allowed to leave their money behind them before they go? Surely if they are allowed this latitude to talk all round the subject—

Mr. DEPUTY-SPEAKER: The Amendment deals with the question of insurance policies and certain allowances. No speaker hitherto has dealt with Death Duties as such, on this Amendment.

Mr. JONES: I do not wish to dispute your Ruling, but I want to say respectfully that two Members on the Opposition benches have already spoken about Death Duties, and almost brought tears to the eyes of the sceptre. [Interruption.] You may call it what you like—the Mace. It is the same thing. My knowledge of
English history is as good as yours, although I do not come from West Kensington. I suggest that, as far as we are concerned, this Amendment is an attempt to save the rich at the expense of the poor. The Resolutions contained in the Budget are all part and parcel of a general policy. The money has to be found, and it has to be found from where it is. The people who have it are squealing, and the people who have not got it are not squealing. I am one of those who has not got it, but I shall probably have to pay more because the people who have the economic power will take care that everything which they pay shall come back again from us.

Sir L. WORTHINGTON-EVANS: I want to speak for a few moments on the Amendment, which is merely to omit the pre-1916 policies, as my right hon. Friend said, on the ground that, for a very long time, at any rate, it has been understood that the premiums paid in respect of those policies should be deducted from the amount upon which Income Tax would otherwise be payable, and, consequently, that they should have a rebate for Income Tax. Whether that is a bargain or is not a bargain, it has been a recognised fact for a good long time—for 30 years to my knowledge, and probably more. So well was it recognised that in 1918 there was no attempt to deal with the pre-1916 policies. It was admitted at once, and no one disputed it, that those policies were subject to a special arrangement or bargain. The alteration reducing the allowances was specifically limited to the policies taken out after the 22nd June, 1916. The right hon. Gentleman defended his action—I am not sure whether it is a defence—or explained his action by saying that this was not a large amount—it was £150,000 a year—and that it was to come only from those with an income of over £2,000 a year, and that it could not affect thrift because, as far as he was concerned, he had "got" these people. They had already taken out their policies, and it was not a question of encouraging thrift in their case because there was nothing more to hope from them, and he could do what he liked with them. Is that really a sound argument?
The Chancellor of the Exchequer is on this occasion breaking this bargain to the extent of 6d. only. Instead of allowing 4s. 6d. rebate he is allowing 4s. re-
bate. If that is open to him, why is it not open to him to abolish the rebate altogether? Why cannot he say we will take off not 6d. but 4s. 6d.? If that is done, or even if it is contemplated that this advantage hitherto given in order to encourage thrift and insurance should be taken away, what about the future? Those people who are now taking out policies are, within certain limits, entitled to claim half their premiums as a rebate from Income Tax. If he takes off 6d. now, why should he not alter that half now? Does not that affect thrift? Of course it affects the future. Once you start altering this, you begin repudiating what are, in fact, bargains. They may not be signed, sealed and delivered in a particular legal form, but they are bargains which have been respected by this House for the last 30 years, respected again when they came under discussion in 1918, and ever since that time have been maintained by every Chancellor of the Exchequer, including the right hon. Gentleman. Previously he has not done this, but now he thinks that he can get 6d. Next year he may think that he can get, not 6d. from these people, but 4s., and 2s., or 2s. 3d. from those with incomes under £2,000 a year.
The right hon. Gentleman started to explain this Resolution by saying that it ought to be passed or otherwise people would obtain back more than they had actually paid in Income Tax. No one wants the Revenue to lose or to pay back more than has been paid in Income Tax. That is a very simple proposition. It does not entail repudiation. It does not damage thrift, but it does do justice to the Exchequer as against those who might claim against the Exchequer. I ask the Chancellor of the Exchequer, therefore, to withdraw this Resolution altogether and to substitute for it one which protects him by saying that no one shall receive back in rebate more than he has actually paid. If he will not do that, then when the Finance Bill comes before Committee I shall put down an Amendment to that effect.

Mr. MACQUISTEN: As I understand the position, there are only three parties to these pre-1916 policies—the insurance companies, the policy-holders and the State. The State encouraged these policies to be taken out by saying that the insured person would get Income Tax
rebate on them. The State is now going back on that and is saying: "We are going to modify that, and now that you have taken out the policy you cannot help yourself. You are in the cart and we are going to take advantage of the position." I can understand in times of war and great national stress, when the safety of the country is at stake, extra-ordinary things being done, but in a time like this, even with all the distress which we have, I cannot understand why the Chancellor of the Exchequer should so damage the credit of the country by doing a thing of this character. It is like petty larceny to take this £150,000. It is a miserable thing to do, and it is still more regrettable to say that there are only a few of them and that they have a good deal of money and do not mind. He ought to keep his word to gentlemen of means as well as to gentlemen with no means. The Under-Secretary of State for Air stated the other night, when somebody said that there was a great feeling of indignation somewhere about something, there was only 2 per cent. A man can feel indignant at a wrong done which does not affect him personally, because a wrong done to one individual is a wrong done to the whole body politic, and as Thomas Carlyle said:
There is not a wrong being done in any part of the world but the whole world smarts for it.
It is a definite going back. It is going to damage the State's credit, and credit is good name, and good name is capital. The man with commercial ability can always find capital. A man who has always plenty of money and business once said to me that here are very few men with character and capacity. If the State infringes on capital and credit its good name will go and capital will feel no sense of security. If you know your burdens you can face them, but if you do not know whether the Chancellor of the Exchequer is going to come out every April like a thief in the night and deprive you of something which has been yours for half a century what is going to be the result? I know of one case of an estate valued at £200,000. There was nothing to meet the situation when six months had elapsed. This method of insurance is adopted by prudent people so that they can remain solvent and not have all their property broken up. This
is now being imperilled because, even though the amount is not great, there is a suspicion of bad faith and I think that the Chancellor of the Exchequer of this country should, like Caesar s wife, at least be above suspicion.

Mr. TINKER: I should like to say a few words with regard to the pledges which have been challenged by Members on the opposite side. I want to remind them that in 1926 pledges went by the board quite easily. I refer to the crisis which obtained then. We as miners received a seven-hour day in 1919. That was a pledge to the country. In the elections which were fought no mention was made of any future alteration of hours. Did the Tory party consider that that was a pledge? Did they stand by that? No, when the time suited them and the cry for some action came the position was entirely changed. To-day the Chancellor of the Exchequer wants some money. The Chancellor of the Exchequer has gone to the place where he thinks he can get it. It would have suited the other side much better probably if he had gone to the poor and spread it over a lot of people so that no one would have really known about it. The Chancellor of the Exchequer is now devoting himself to the party opposite who can afford to pay. It is quite easy to find out where the shoe pinches. As long as it does not trouble hon. Members opposite all goes well with them, but when it comes upon their shoulders there is a big cry about broken pledges and about capital being driven out of the country and all that kind of thing. I hope that the Chancellor of the Exchequer will not take any notice of that kind of threat. I hope that it will simply be like pouring water on to a duck's back and that it will have no effect at all. In spite of this hon. Members opposite will try to accumulate as much as they can. I want the Chancellor of the Exchequer to watch to try to prevent, if he can, the passing away of this money before death takes place. One hon. Member, speaking about what this would mean, said that there would be transferencies of fortune before a man died.

Mr. DEPUTY-SPEAKER: Hon. Members must keep to the point at issue. It is strictly limited to whether or not
there should be certain rebates on a certain class of policies, and the hon. Member must keep to that point.

Mr. TINKER: I quite agree, but the other side deviated from it.

Mr. DEPUTY-SPEAKER: That statement has been made before. I have been in the House during the whole of the Debate, and except for some slight deviation Death Duties have not been raised on this Amendment which we are discussing. Hon. Members must in any case accept my definite ruling. I am not prepared to allow further deviation on this matter.

6.0 p.m.

Mr. TINKER: I will not dispute the point with you, and I accept your Ruling. If I have wandered from the main point I apologise. It was not my intention to go outside the point. I hope that the Chancellor will not be diverted by threats from the other side, and that he will stick to the point which he has outlined in his policy.

Mr. SMITHERS: May I ask the Chancellor or the Financial Secretary to reply definitely to this question because I want it on record in the OFFICIAL REPORT. If this Resolution goes through un-amended what policies will be affected and what will be the date of the policies? How far would it go back? And what would be the dates of the policies that would be affected?

Mr. PETHICK-LAWRENCE: If this Resolution goes through the effect will be that 4s. is substituted for 4s. 6d. Of course, that affects all policies, but it is subject to the other provision which will be put into the Finance Bill and which has not yet appeared in a Resolution, that so far as the first £250 is concerned the rate will be only 2s. in the £ instead of 2s. 3d. The policies of persons whose incomes are above a certain figure are affected in the various categories concerned.

Mr. SMITHERS: May we take it that, subject to the short Amendment which will be put into the Finance Bill, the Resolution before the House applies to all existing policies?

Mr. PETHICK-LAWRENCE: It applies to all policies.

Question put, "That those words be there inserted."

The House divided: Ayes, 203; Noes, 223.

Division No. 273.]
AYES.
[6.5 p.m.


Acland-Troyte, Lieut.-Colonel
Ferguson, Sir John
Monsell, Eyres, Com. Rt. Hon. Sir B.


Albery, Irving James
Fermoy, Lord
Morris-Jones, Dr. J. H. (Denbigh)


Allen, Sir J. Sandeman (Liverp'l., W.)
Fison, F. G. Clavering
Morrison, W. S. (Glos., Cirencester)


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Foot, Isaac
Muirhead, A. J.


Aske, Sir Robert
Ford, Sir P. J.
Nathan, Major H. L.


Astor, Viscountess
Fremantle, Lieut.-Colonel Francis E.
Newton, Sir D. G. C. (Cambridge)


Atholl, Duchess of
Galbraith, J. F. W.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)


Baldwin, Rt. Hon. Stanley (Bewdley)
Ganzoni, Sir John
Nield, Rt. Hon. Sir Herbert


Balfour, George (Hampstead)
Gault, Lieut.-Col. Andrew Hamilton
O'Neill, Sir H.


Balfour, Captain H. H. (I. of Thanet)
George, Major G. Lloyd (Pembroke)
Owen, Major G. (Carnarvon)


Balniel, Lord
George, Megan Lloyd (Anglesea)
Peake, Captain Osbert


Beaumont, M. W.
Gilmour, Lt.-Col. Rt. Hon. Sir John
Penny, Sir George


Betterton, Sir Henry B.
Glassey, A. E.
Peto, Sir Basil E. (Devon, Barnstaple)


Bevan, S. J. (Holborn)
Glyn, Major R. G. C.
Pilditch, Sir Philip


Birchall, Major Sir John Dearman
Grace, John
Pownall, Sir Assheton


Bird, Ernest Roy
Graham, Fergus (Cumberland, N.)
Preston, Sir Walter Rueben


Birkett, W. Norman
Grattan-Doyle, Sir N.
Purbrick, R.


Blindell, James
Gray, Milner
Pybus, Percy John


Bourne, Captain Robert Croft
Greaves-Lord, Sir Walter
Ramsay, T. B. Wilson


Bowater, Col. Sir T. Vansittart
Grenfell, Edward C. (City of London)
Ramsbotham, H.


Bowyer, Captain Sir George E. W.
Gretton, Colonel Rt. Hon. John
Rawson, Sir Cooper


Boyce, H. L.
Guinness, Rt. Hon. Walter E.
Remer, John R.


Bracken, B.
Gunston, Captain D. W.
Rentoul, Sir Gervals S.


Brass, Captain Sir William
Hacking, Rt. Hon. Douglas H.
Roberts, Sir Samuel (Ecclesall)


Briscoe, Richard George
Hall, Lieut.-Col. Sir F. (Dulwich)
Rodd, Rt. Hon. Sir James Rennell


Brown, Brig.-Gen. H. C.(Berks, Newb'y)
Hamilton, Sir George (Ilford)
Ross, Major Ronald D.


Buchan, John
Hammersley, S. S.
Rothschild, J. de


Bullock, Captain Malcolm
Hanbury, C.
Ruggles-Brise, Lieut.-Colonel E. A.


Burgin, Dr. E. L.
Hannon, Patrick Joseph Henry
Russell, Alexander West (Tynemouth)


Castle Stewart, Earl of
Haslam, Henry C.
Russell, Richard John (Eddisbury)


Cautley, Sir Henry S.
Henderson, Capt. R. R. (Oxf'd, Henley)
Salmon, Major I,


Cayzer, Sir C. (Chester, City)
Hennessy, Major Sir G. R. J.
Samuel, A. M. (Surrey, Farnham)


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Herbert, Sir Dennis (Hertford)
Samuel, Samuel (W'dsworth, Putney)


Cazalet, Captain Victor A.
Hills, Major Rt. Hon. John Waller
Sandeman, Sir H. Stewart


Chadwick, Sir Robert Burton
Hope, Sir Harry (Forfar)
Savery, S. S.


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Howard-Bury, Colonel C. K.
Skelton, A. N.


Chamberlain, Rt. Hon. N. (Edgbaston)
Hudson, Capt. A. U. M. (Hackney, N.)
Smith, Louis W. (Sheffield, Hallam)


Chapman, Sir S.
Hunter, Dr. Joseph
Smith-Carington, Neville W.


Christie, J. A.
Hunter-Weston, Lt.-Gen. Sir Aylmer
Smithers, Waldron


Churchill, Rt. Hon. Winston Spencer
Hurd, Percy A.
Southby, Commander A. R. J.


Cohen, Major J. Brunel
Hutchison, Maj.-Gen. Sir R.
Spender-Clay, Colonel H.


Colfox, Major William Philip
Iveagh, Countess of
Stanley, Maj, Hon. O. (W'morland


Collins, Sir Godfrey (Greenock)
James, Lieut.-Colonel Hon. Cuthbert
Steel-Maitland, Rt. Hon. Sir Arthur


Colman, N. C. D.
Jones, F. Llewellyn- (Flint)
Stuart, Hon. J. (Moray and Nairn)


Colville, Major D. J.
Jones, Henry Haydn (Merioneth)
Sueter, Rear-Admiral M. F.


Courthope, Colonel Sir G. L.
Kindersley, Major G. M.
Tinne, J. A.


Cowan, D. M.
King, Commodore Rt. Hon. Henry D.
Todd, Capt. A. J.


Crichton-Stuart, Lord C.
Knox, Sir Alfred
Train, J.


Cranborne, Viscount
Lamb, Sir J. Q.
Tryon, Rt. Hon. George Clement


Croft, Brigadler-General Sir H.
Lambert, Rt. Hon. George (S. Molton)
Vaughan-Morgan, Sir Kenyon


Crookshank, Capt. H. C.
Lane Fox, Col. Rt. Hon. George R.
Wallace, Capt. D. E. (Hornsey)


Cunliffe-Lister, Rt. Hon. Sir Philip
Law, Sir Alfred (Derby, High Peak)
Ward, Lieut.-Col. Sir A. Lambert


Culverwell, C. T. (Bristol, West)
Leighton, Major B. E. P.
Wardlaw-Milne, J. S.


Dalrymple-White, Lt.-Col. Sir Godfrey
Lewis, Oswald (Colchester)
Warrender, Sir Victor


Davies, Dr. Vernon
Llewellin, Major J. J.
Waterhouse, Captain Charles


Davies, Maj. Geo. F.(Somerset, Yeovil)
Locker-Lampson, Rt. Hon. Godfrey
Wayland, Sir William A.


Davison, Sir W. H. (Kensington, S.)
Long, Major Eric
Wells, Sydney R.


Duckworth, G. A. V.
Lymington, Viscount
Williams, Charles (Devon, Torquay)


Dudgeon, Major C. R.
McConnell, Sir Joseph
Wilson, G. H. A. (Cambridge U.)


Dugdale, Capt. T. L.
Maclean, Sir Donald (Cornwall, N.)
Windsor-Clive, Lieut.-Colonel George


Eden, Captain Anthony
Macpherson, Rt. Hon. James I.
Wolmer, Rt. Hon. Viscount


Edmondson, Major A. J.
Macquisten, F. A.
Womersley, W. J.


Elliot, Major Walter E.
MacRobert, Rt. Hon. Alexander M.
Wood, Rt. Hon. Sir Kingsley


Elmley, Viscount
Maitland, A. (Kent, Faversham)
Worthington-Evans, Rt. Hon. Sir L.


England, Colonel A.
Makins, Brigadier-General E.
Young, Rt. Hon. Sir Hilton


Erskine, Lord (Somerset, Weston-s-M.)
Margesson, Captain H. D.



Evans, Capt. Ernest (Welsh Univer.)
Marjoribanks, E. C.
TELLERS FOR THE AYES.—


Everard, W. Lindsay
Meller, R. J.
Sir Frederick Thomson and


Falle, Sir Bertram G.
Mitchell, Sir W. Lane (Streatham)
Marquess of Titchfield.




NOES.


Adamson, Rt. Hon. W. (Fife, West)
Baldwin, Oliver (Dudley)
Broad, Francis Alfred


Adamson, w. M. (Staff., Cannock)
Barnes, Alfred John
Brockway, A. Fenner


Addison, Rt. Hon. Dr. Christopher
Barr, James
Bromfield, William


Altchison, Rt. Hon. Craigle M.
Batey, Joseph
Bromley, J.


Alexander, Rt. Hon. A. V. (Hlllsbro')
Bellamy, Albert
Brooke, W.


Alpass, J. H.
Bennett, Captain E. N. (Cardiff, Central)
Brown, C. W. E. (Notts, Mansfield)


Ammon, Charles George
Benson, G.
Brown, Rt. Hon. J. (South Ayrshire)


Arnott, John
Bentham, Dr. Ethel
Burgess, F. G.


Ayles, Walter
Bevan, Aneurin (Ebbw Vale)
Buxton, C. R. (Yorks. W. R. Elland)


Baker, John (Wolverhampton, Bilston)
Bowerman, Rt. Hon. Charles W.
Buxton, Rt. Hon. Noel (Norfolk, N.)




Caine, Derwent Hall-
Jones, T. I. Mardy (Pontypridd)
Riley, F. F. (Stockton-on-Tees)


Cameron, A. G.
Jowett, Rt. Hon. F. W.
Ritson, J.


Cape, Thomas
Jowitt, Rt. Hon. Sir W. A.
Roberts, Rt. Hon. F. O. (W. Bromwich)


Carter, W. (St. Pancras, S. W.)
Kennedy, Thomas
Romeril, H. G.


Charleton, H. C.
Kenworthy, Lt.-Com. Hon. Joseph M.
Rosbotham, D. S. T.


Chater, Daniel
Kinley, J.
Rowson, Guy


Church, Major A. G.
Knight, Holford
Salter, Dr. Alfred


Clarke, J. S.
Lang, Gordon
Samuel, H. W. (Swansea, West)


Cluse, W. S.
Lansbury, Rt. Hon. George
Sanders, W. S.


Clynes, Rt. Hon. John R.
Lathan, G.
Sandham, E.


Cocks, Frederick Seymour
Law, A. (Rosendale)
Sawyer, G. F.


Compton, Joseph
Lawson, John James
Scrymgeour, E.


Daggar, George
Lawther, W. (Barnard Castle)
Scurr, John


Dallas, George
Leach, W.
Sherwood, G H.


Davies, E. C. (Montgomery)
Lee, Frank (Derby, N. E.)
Shield, George William


Davies, Rhys John (Westhoughton)
Lee, Jennie (Lanark, Northern)
Shillaker, J. F.


Day, Harry
Lees, J.
Shinwell, E.


Denman, Hon. R. D.
Lewis, T. (Southampton)
Short, Alfred (Wednesbury)


Dickson, T.
Lindley, Fred w.
Simmons, C. J.


Dukes, C.
Lloyd, C. Ellis
Sinkinson, George


Duncan, Charles
Logan, David Gilbert
Smith, Alfred (Sunderland)


Ede, James Chuter
Longbottom, A. W.
Smith, Ben (Bermondsey, Rotherhithe)


Edge, Sir William
Longden, F.
Smith, Frank (Nuneaton)


Edmunds, J. E.
Lovat-Fraser, J. A.
Smith, H. B. Lees- (Keighley)


Edwards, C. (Monmouth, Bedwellty)
Lunn, William
Smith, Rennie (Penistone)


Edwards, E. (Morpeth)
McEntee, V. L.
Smith, Tom (Pontefract)


Egan, W. H.
Mackinder, W.
Snell, Harry


Freeman, Peter
McKinlay, A.
Snowden, Rt. Hon. Philip


Gardner, B. W. (West Ham, Upton)
Maclean, Neil (Glasgow, Govan)
Snowden, Thomas (Accrington)


Gardner, J. P. (Hammersmith, N.)
MacNeill-Weir, L.
Sorensen, R.


Gibbins, Joseph
McShane, John James
Stamford, Thomas W.


Gibson, H. M. (Lancs, Mossley)
Malone, C. L'Estrange (N'thampton)
Stewart, J. (St. Rollox)


Gill, T. H.
Mansfield, W.
Strachey, E. J. St. Loe


Gillett, George M.
March, S.
Strauss, G. R.


Gossling, A. G.
Markham, S. F.
Sullivan, J.


Gould, F.
Marley, J.
Taylor, W. B. (Norfolk, S. W.)


Graham, D. M. (Lanark, Hamilton)
Marshall, Fred
Thomas, Rt. Hon. J. H. (Derby)


Graham, Rt. Hon. Wm. (Edin., Cent.)
Mathers, George
Thorne, W. (West Ham, Plaistow)


Greenwood, Rt. Hon. A. (Colne)
Matters, L. W.
Thurtle, Ernest


Grenfell, D. R. (Glamorgan)
Melville, Sir James
Tillett, Ben


Griffith, F. Kingsley (Middlesbro' W.)
Messer, Fred
Tinker, John Joseph


Griffiths, T. (Monmouth, Pontypool)
Milner, Major J.
Trevelyan, Rt. Hon. Sir Charles


Groves, Thomas E.
Montague, Frederick
Turner, B.


Grundy, Thomas W.
Morley, Ralph
Vaughan, D. J.


Hall, F. (York, W. R., Normanton)
Morris, Rhys Hopkins
Viant, S. P.


Hall, G. H. (Merthyr Tydvil)
Morrison, Herbert (Hackney, South)
Walkden, A. G.


Hall, Capt. W. P. (Portsmouth, C.)
Morrison, Robert C. (Tottenham, N.)
Walker, J.


Hamilton, Mary Agnes (Blackburn)
Mart, D. L.
Watkins, F. C.


Hardle, George D.
Moses, J. J. H.
Watson, W. M. (Dunfermilne)


Harris, Percy A.
Muff, G.
Wellock, Wilfred


Hartshorn, Rt. Hon. Vernon
Murnin, Hugh
Welsh, James (Paisley)


Hastings, Dr. Somerville
Naylor, T. E.
Welsh, James C. (Coatbridge)


Haycock, A. W.
Newman, Sir R. H. S. D. L. (Exeter)
West, F. R.


Hayday, Arthur
Oldfield, J. R.
Westwood, Joseph


Hayes, John Henry
Oliver, George Harold (IIkeston)
Wheatley, Rt. Hon. J.


Henderson, W. W. (Middx., Enfield)
Palin, John Henry.
Whiteley, Wilfrid (Birm., Ladywood)


Herriotts, J.
Paling, Wilfrid
Wilkinson, Ellen C.


Hirst, G. H. (York W. R. Wentworth)
Palmer, E. T.
Williams, David (Swansea, East)


Hirst, W. (Bradford, South)
Parkinson, John Allen (Wigan)
Williams, T. (York, Don Valley)


Hoffman, P. C.
Perry, S. F.
Wilson, C. H. (Sheffield, Attercliffe)


Hollins, A.
Pethick-Lawrence, F. W.
Wilson, J. (Oldham)


Hopkin, Daniel
Picton-Turbervill, Edith
Wilson, R. J. (Jarrow)


Horrabin, J. F.
Pole, Major D. G.
Winterton, G. E.(Leicester, Loughb'gh)


Hudson, James H. (Huddersfield)
Potts, John S.
Wise, E. F.


Isaacs, George
Price, M. P.
Young, R. S. (Islington, North)


Jenkins, W. (Glamorgan, Neath)
Quibell, D. J. K.



John, William (Rhondda, West)
Raynes, W. R.
TELLERS FOR THE NOES.—


Jones, J. J. (West Ham, Silvertown)
Richardson, R. (Houghton-le-Spring)
Mr. William Whiteley and Mr. T.


Jones, Morgan (Caerphilly)
Riley, Ben (Dewsbury)
Henderson.


Twelfth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. A. M. SAMUEL: I wonder how many hon. Members and right hon. Mem-
bers understand what this Resolution really means. It is not my intention to give my own interpretation of it as being correct, nor is it the intention of hon. Members on this side of the House to oppose it, but I must ask the Chancellor of the Exchequer to explain what it really does mean and whether my reading of it is correct. I have gone to some considerable trouble to find out exactly what it means. I take it that
paragraphs (a) and (b) of the Resolution should be read together, and if my interpretation of it is correct I am quite prepared to accept it. I think paragraph (a) means this; that the only alteration is that Sub-section (2) of Section 211 of the Act of 1918 will apply in future to preference dividends. If a limited company paying dividends has deducted too little by way of Income Tax, it can take the necessary amount off the next dividend.
Now I come to paragraph (b), and I really must protest against a sentence of 150 words without a full stop. How is it possible for any layman to understand a sentence constructed in this way? That long and involved sentence presumably means that the gross amount shown on a dividend warrant must be adjusted by the taxpayer when he makes his return so that the variation, greater or less, is disclosed by the taxpayer. That is to say, that as the amount stated by the company on the voucher cannot be altered, for physical reasons, the taxpayer must make the alteration when making his return. Presumably it means that the next voucher issued by the company will show the adjustment. If that is so I do not propose to offer any opposition to the Resolution, but I should be obliged if the Financial Secretary will say whether I am right, and put the matter in plain English.

Mr. PETHICK-LAWRENCE: So far as paragraph (a) is concerned, the hon. Member is quite correct. It refers to preference dividends, and extends to them the principle which hitherto has applied to debenture interest. So far as that point is concerned the hon. Member is quite correct. As far as paragraph (b) is concerned, I am not quite clear whether I understood him correctly. Paragraph (b) refers to the payment on ordinary shares, and so far as those are concerned the arrangements under paragraph (a) do not apply. Under paragraph (a), if there is any failure to pay the whole Income Tax on preference shares in May, it can be made up in November, but so far as paragraph (b) is concerned, that is not the method of dealing with ordinary shares. Whatever is the net amount that the taxpayer receives on ordinary shares it is regarded as the net amount he should have re-
ceived if the right deduction had been made for Income Tax purposes, and, therefore, the gross amount before the deduction of Income Tax is greater than that which appears on the dividend warrant.
Let me give one illustration. Suppose there are preference shares of 5 per cent. and a person holds £100 worth. He is entitled to £5 dividend. When the tax was 4s. in the £, one-fifth of that was deducted, and he actually received £4. The rule under paragraph (a) is that when it comes to the autumn dividend, the taxpayer will receive less than £5, with 4s. 6d. subtracted, in order to make up for the fact that he has received too much in the spring. When it comes to the receipts from ordinary shares the method adopted is quite different. Suppose a company declares a dividend of 5 per cent., it will show on the dividend warrant £5 less £1 Income Tax deducted at 4s. in the £, and the shareholder will receive £4. That £4 is regarded as the tax free dividend which that shareholder has received, and it is equivalent to a larger amount than £5 from which the correct tax of 4s. 6d. has been deducted. As far as the preference shareholder is concerned the amount will have to be made up in the autumn. As far as the ordinary shareholder is concerned the amount is correct.

Mr. A. M. SAMUEL: I am much obliged to the Financial Secretary. I am aware that paragraph (b) applies to shares other than preference shares, because it is stated so in plain language in the paragraph.

Mr. SPEAKER: The hon. Member knows that he cannot make two speeches.

Mr. SAMUEL: No, I was only putting this one point to the Financial Secretary. The hon. Member confined himself to ordinary and preference shares. I should like to know whether any other kind of dividends is covered by this Resolution?

Mr. PETHICK-LAWRENCE: Debenture interest is covered by the existing law. Broadly speaking, there are three kinds of income, debenture, preference and ordinary share dividends. Debenture interest is covered by the existing law, preference dividends are covered under paragraph (a) and ordinary share interest under paragraph (b).

Sir DENNIS HERBERT: I should like to ask for information on one point. The holder of ordinary shares, receiving income in dividends on those shares, receives, or has received them in the past, less Income Tax for which he is liable, and, therefore, he has not had to pay any tax himself in respect of those dividends. Am I right in saying that under this Resolution he will now in certain cases have to pay a small amount of Income Tax direct?

Mr. PETHICK-LAWRENCE: No, he will not have to pay any amount himself. The only difference is that he will be regarded as having received more than £5 in gross payment; about £5 3s. 4d. His gross receipts from the company will be regarded as having been £5 3s. 4d., on which after deduction of Income Tax he receives actually £4.

Sir D. HERBERT: Then how does the revenue get the extra tax? I do not understand it.

Mr. PETHICK-LAWRENCE: It gets the tax not from the individual shareholder but from the company. The result is the same as if the company, as it is free to do, had declared a 4 per cent. tax free dividend. If instead of declaring a 5 per cent. dividend, subject to deduction of tax, it declares a 4 per cent. dividend free of tax, as it is perfectly entitled to do, it makes no difference to the revenue. The position will be perfectly clear. The idea is to put the two cases on the same footing. The company pays revenue to the Government on the profit it makes, and it is only when it comes to pay a dividend to its shareholders that it recovers from the shareholders the Income Tax in consideration of the amount it has paid to the Government on its profits.

Sir D. HERBERT: Then in the case of a shareholder parting with his shares, his successor, the man who purchases them, will pay Income Tax in the autumn on dividends received by the previous holder?

Mr. PETHICK-LAWRENCE: Only as far as preference shares are concerned. The tax has gone up in the meantime, and the holder of the preference shares has received too much cash in the spring. His successor will be mulct of the additional amount. This will, no doubt, be reflected in the price of the shares, so
that there is no real injustice to preference shareholders. As far as ordinary shares are concerned, it only affects the actual dividend which the company chooses to pay. It is arguable that the company might not have declared such a large dividend, but, if that is so, that again will be reflected in the price of the shares.

Colonel GRETTON: I wish to draw attention to a point which strikes me as rather strange in the explanation which has been given. The Government do not intend, apparently, to deal with debentures, but in regard to preference shares they make one alteration in the law of assessment for Income Tax and in the case of ordinary shares they make another. What reason can they advance for this difference in treatment? It has already come out in the discussion that the advisers of the Government anticipate that this treatment of the preference shares will be reflected in the price of those shares when they are sold, and no doubt that is so, but why should the shares be subject to this alteration in price as a result of there being this additional charge on them at the next distribution of preference dividend? It is an injustice to the man who has held his shares but for some reason or another is compelled to sell them in order to raise money. The man will sell his shares at a less price because, in the matter of dividend, the shares have received more than the Government propose that they should receive under the terms of this Budget, and the next purchaser fixes the price accordingly, as the Government anticipate he will do. It is a complicated matter and a technical matter, but it does inflict an injustice. The Government may say that it is only a little one, hit that is no answer, because there may be large transactions.
Now I will deal with the case of the ordinary shares. The result of the arrangement which the Government propose will be that a company will have to pay a higher rate of Income Tax but will only be entitled to deduct the rate of tax which this resolution lays down, that is to say, a lower rate of tax. Either the company declaring its dividend is, according to the Government theory, going to declare a fictitious dividend higher, for the purposes of this. Resolution, than they did declare, or they are going to declare
the tax on this dividend as if they had declared a higher dividend and had to pay the difference in tax themselves. This is a most astounding way of muddling and confusing an ordinary commercial transaction. Why should we be troubled with all these Income Tax questions arising out of the complications of the regulations under various Finance Acts? We ought not to pass these Resolutions in the form in which they are without a clear explanation from the Government as to the grounds on which they are prepared to support them. What we want is a clarification of the assessment of Income Tax and the simplification of rules, so that the unfortunate taxpayer may know more clearly where he stands, and not find himself involved in much correspondence, often costly, because he has to take advice, and often producing little or no result, because of the obscurity of the rules and the multiplication of advisers by whom he is surrounded.

Mr. GRAY: I think there is a certain amount of reason behind the action of the Government, though hon. Members in some parts of the House perhaps do not yet realise it. There is a distinction between debenture interest, preference interest and ordinary share interest. The first two are fixed rates of interest, not dependent on the profit earned or the period at which the dividend is declared. It may be paid a few months later, but it is paid at a specific period and at a specific rate. In the case of ordinary shares the dividend to be paid is at the option of the directors of the company. They may pay that dividend subject to deduction of tax or tax free. Apparently for some purpose of the revenue of which, I confess, I do not see the advantage, the Government have decided that the tax on ordinary shares shall be treated as having been deducted at the rate of 4s. 6d. instead of at whatever rate it may have been deducted and that the net amount of that dividend shall be regarded as a tax free dividend and Income Tax at the rate of 4s. 6d. added to it. If the House follows out the effect of that, they will see it means this. I have worked a sum so as to show how the figures come out, and for convenience have taken the amount of dividend as £38 15s. Income Tax deducted at the rate of 4s. would give a net dividend of £31, but under this Clause anybody
receiving a dividend of £31 would be regarded by the revenue as having received an income not of £38 15s., but an income of £40, on which tax of £9 had been paid. I think I am correct in this—that it means that the small receiver of dividends who is entitled to recover Income Tax on his dividend will not recover £7 15s., but will be able to recover £9, because this dividend will be treated as £40 dividend with £9 tax deducted; but the Surtax payer will be regarded as having received a dividend of £40 and not a dividend of £38 15s. The effect is that there is an advantage to the receiver of income who is entitled to reclaim tax, but there is a small disadvantage to the Surtax payer, who will find his income regarded as being on a slightly higher level.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. A. M. SAMUEL: I gather that this Resolution is meant to operate so as to bring about an adjustment where there is a reduction of the standard rate of Income Tax. If that be so, I assume that the Resolution is to be incorporated in a new law. Will the Chancellor of the Exchequer be so good as to give me some explanation as to the method by which it is proposed to give effect to this suggested amendment of the law? At present the Resolution is simply a blank cheque.

Mr. PETHICK-LAWRENCE: This simply extends to preference dividends the rules at present applied to debentures. It is the converse of the Resolution which we have just carried so far as preference dividends are concerned. If there had been a reduction of the rate of tax from 4s. to 3s. 6d., the person holding preference shares who had paid tax at the rate of 4s. on them would be entitled to an extra allowance in the autumn to make up for the inadequate amount he has received. He would be entitled to receive the larger dividend in the autumn because too much Income Tax had been deducted in the spring, and again that would be reflected in the price of the shares.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. A. M. SAMUEL: Perhaps the Chancellor of the Exchequer will say a word to explain this Resolution to us.

Mr. P. SNOWDEN: This Resolution deals with what are known as the single premium policies. It provides the machinery for taking the action which we announced would be taken to deal with this practice. This Resolution is rather widely drawn, but when the Clauses appear in the Finance Bill the House will find that legitimate life insurance has been very fully protected. I hope the House will agree that it is hardly desirable to discuss this subject at great length now. We have an understanding with the Opposition that we shall get all these Resolutions before dinner. [HON. MEMBERS: "No!"] Oh, yes, we have, a very definite undertaking. The Prime Minister announced it in the statement on Thursday about business. It was an understanding arrived at through the usual channels, and it was repeated on Thursday night. The House will remember that I have not asked it to sit late upon any of the days when we have been discussing these Resolutions. We have risen at Eleven o'clock, the ordinary time.

Major ELLIOT: I must consult the Chief Whip on this point, but I think the right hon. Gentleman will find, though I speak subject to correction, that the arrangement was that the Government should get all its business by a reasonable time to-night.

Mr. SNOWDEN: No.

Major ELLIOT: I speak subject to correction, but I had understood that there was not anything in the nature of a binding bargain that it should all be disposed of by 7.30. There is no fundamental difference of opinion about concluding business at a reasonable time, but I do not think that a fixed time was arrived at between the two sides.

Major HILLS: I do not wish to detain the House in coming to a decision, but I think that something further should be said on this Resolution because the Government have promised a very substantial change in the form which it takes.
That is the point which I wish to raise. First of all, the Chancellor of the Exchequer has been obliged to make some change in regard to what are known as short-term endowment policies. I would like to ask if that proposal need be retrospective. There is a well-known principle in our law that a subject who can place himself outside taxation is entitled to do so. That principle has descended to us from the day taxes were paid to kings, and it ought to inure now when taxes are paid to such an autocratic person as the Chancellor of the Exchequer. If these Surtax payers were within the law when they took out their single premium policies, I suggest that they should not be told now that they are outside the law.
I want to raise another point: under the Resolution as drawn no payment made in respect of money borrowed in regard to any policy can be a deduction against the income assessable for Surtax. As the Resolution stands, a man might want to provide by a perfectly proper insurance a life policy for his wife and family, and for this purpose he might mortgage certain property in order to pay the premium on that policy. If that man, instead of mortgaging his property for an insurance policy, simply spent the interest on his money, it could be deducted in his Surtax return, but because he employs that money to insure his wife and children he is unable to do that. In the case of an endowment policy also that may be quite a proper transaction.
Let me give an instance of a man who may be under a contract, which often occurs in a marriage allowance, to find £1,000 or more on his death, or within a term of years of, say, 10 years. That man, if he likes, may borrow the money from his bank, and if he does so he can deduct the interest on that money from his surtaxable income. But if tthis Resolution is passed, and that man decides to take out an endowment policy for 10 years, then he cannot deduct the premiums from the surtaxable income, if he borrows those premiums. It comes to this, that every commercial transaction involving a loan does not come under this arrangement except when the loan is devoted to insurance, and surely that cannot be a just arrangement. When we see the Finance Bill I hope that many of these defects will be remedied, but I would like to make one simple sugges-
tion. Could not the Chancellor of the Exchequer do what he wants to do not by all these elaborate provisions, but by ruling out for tax deduction all short-term endowment policies, but excluding therefrom long-term endowment policies, thus giving the latter the benefit of tax deduction? In addition, I would like to ask the right hon. Gentleman if he could limit in some way the scope of single premium policies.

Mr. SPEAKER: I think the right hon. and gallant Member is now going outside the scope of this Resolution. We must confine ourselves to the discussion of what is contained in the Resolution, and the right hon. and gallant Member cannot suggest the introduction of new proposals.

Major HILLS: I have made my point. I was suggesting alternatives. I think that this Resolution goes much too far, and it seems to me to be penalising a very fruitful form of investment. I hope that when we see the Finance Bill the Schedule will not go quite so far.

Sir D. MACLEAN: I was glad to hear what the Chancellor of the Exchequer said with regard to the intention of the Government as indicated in this Resolution, although its terms are very wide. The intention, I understand, is to see that what is really a substantial amount of life insurance is adequately protected.

Sir F. HALL: I am entirely with the Chancellor of the Exchequer in protecting the Treasury against the evasion of the Surtax in regard to these insurance policies. Anyone who has studied the question of insurance must agree that these endowment policies should receive careful consideration at the hands of the Chancellor of the Exchequer, because there is such a wide difference between single premium policies, five-year policies and 20-year policies. A 20-year policy is looked upon as a reasonable form of insurance for the protection of a wife and children, or for other purposes. For example, when a man gets married he may take out a 20-year policy with a view of afterwards placing it in some form of investment, and there is a vast difference between the policies taken out for one party, and one party alone.
Although I am averse from some of the policies which have been taken out in
the past, nevertheless I am more averse to retrospective legislation in regard to this question, and I think that is one of the worst features we could possibly have. It has always been recognised that if you can legitimately save taxation you are entitled to do so. By all means let us tighten up the law in order that there cannot be any evasion, but I think we should know, when legislation has been in operation, that no distinction is made between the part of the money which has been borrowed. There should be one thing in common, and it is that legislation should not be passed by this House of a retrospective nature, which I abhor and loathe.
With regard to policies which have been taken out, I am going to ask the Chancellor of the Exchequer to give to them that careful consideration which has been recognised in all legislation up to the present time. Never mind what has taken place in the past, because we must grin and bear those evils, but let us take steps to see that a stoppage is put to the practice which is now taking place in regard to certain forms of insurance.

Sir HUGH O'NEILL: I believe we have been told that deductions which have been made under a single-premium policy will no longer be allowed. Does that mean that there will be any attempt to recover those deductions?

Mr. PALMER: I think that the Chancellor of the Exchequer is right in dealing with the abuses in regard to loans for a single premium, but there may be cases of amounts of £1,000 where there may be no abuse whatever, and no excuse for not allowing the interest on the £1,000 to come into the arrangement. It is when assurances include large sums of borrowed money that the abuse is most manifest. I would like the Chancellor of the Exchequer to remember that point, and to see if there is not a point at which this practice might still be permissible to some extent. A man who is normally insured for £1,000 and pays in one premium gets his remission all right, but if he does the same thing by borrowing a £1,000, which he may be able to obtain at a low rate of interest, he gets no rebate for the amount of money borrowed. That is the only point which I wish to make. I think we are generally in agreement with the Resolu-
tion, and we are all agreed that something should be done to stop what is known to be a very serious abuse of this tax.

7.0 p.m.

Sir D. HERBERT: The resulting legislative proposals will, I understand, be something very much narrower than the full extent of this Resolution. The point I wish to make—and it is not a point definitely against the Resolution—is a point of Parliamentary procedure, which I regard as being of some importance. I do not think that these Financial Resolutions ought to be so drawn so immensely wider than the intentions of the Government as to the ultimate resulting legislation. The whole object of this Financial Resolution is to draw the public attention, and the special attention of this House, to taxing proposals of the Government and the effect of them when they are carried is that the Government cannot go beyond the limits of that Resolution in imposing taxation. Now, if we are going to have a habit of passing in this House resolutions giving power to impose a tax very much more widespread than is intended, we are going to strike a very serious blow at one of the most valuable parts of the procedure of the House, and of the safeguards against new taxation.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. CHURCHILL: We will no doubt receive from the Government some explanation of the purpose they have in mind in placing this Resolution on the Paper.

The ATTORNEY-GENERAL: It is a complicated matter to explain, but I think I can explain it in a few sentences. The House is aware that the principle on which at present you base the obligations of Income Tax payers is that you measure one year by the standard of the previous year. That involves that then
there must always be one year which is taken twice. In the first year, you have no previous year which you can take at all, and consequently you take the actual profits of that year. In the second year of the business you take that period over again as being the standard, namely, the amount made in the previous year. The year One always comes twice therefore in a new business, but at the present time you give the taxpayer this option. If he prefers, in the case of hardship, instead of paying on year Two as measured by year One, he can pay on the actual profits of year Two. We are proposing to give him an option, instead of paying on the actual profits of year Two, to extend his option to years Two and Three. We are going to make him, if he wishes to exercise his option, exercise it in regard to both years Two and Three.

Mr. CHURCHILL: The average?

The ATTORNEY-GENERAL: No, the actual profits of years Two and Three. He can pay if he likes on the actual figures of year Two and year Three instead of the present situation when he pays on the actual figures of year Two. The reason is this: If you get a business with a good profit in the first year, the fact is that that first year is taken three times over at the present time. It applies to a business partly started and begun in the first year, it applies to the second year and to the third year. I can explain it if it is desired. It is very difficult to follow without writing it out on paper. You really want a blackboard. It is quite plain. You apply part of the first year to the second and third year. That may work hardship to business with a bumper first year. On the whole, it is thought more fair and equitable to the taxpayer if we extend the option he at present enjoys to year Two to year Three also. We tell him that, if he is going to exercise the option on year Two, he must exercise it on year Three also. It applies only to a very limited number of cases.

Mr. CHURCHILL: How will that affect businesses?

Mr. P. SNOWDEN: It is very difficult to give an answer to that. On the whole it is expected to develop businesses. It is for that purpose we are proposing it.

Captain BOURNE: I beg to move, to leave out lines 7 to 39 and to insert instead thereof the words:



£

£



Exceeding
100
and not exceeding
1,000
1


Exceeding
1,000
and not exceeding
5,000
2


Exceeding
5,000
and not exceeding
10,000
3


Exceeding
10,000
and not exceeding
15,000
4


Exceeding
15,000
and not exceeding
20,000
5


Exceeding
20,000
and not exceeding
30,000
6


Exceeding
30,000
and not exceeding
50,000
8


Exceeding
50,000
and not exceeding
75,000
9


Exceeding
75,000
and not exceeding
100,000
10


Exceeding
100,000
and not exceeding
125,000
12


Exceeding
125,000
and not exceeding
150,000
14


Exceeding
150,000
and not exceeding
175,000
16


Exceeding
175,000
and not exceeding
200,000
18


Exceeding
200,000
and not exceeding
250,000
20


Exceeding
250,000
and not exceeding
350,000
22


Exceeding
350,000
and not exceeding
500,000
24


Exceeding
500,000
and not exceeding
750,000
26


Exceeding
750,000
and not exceeding
1,000,000
28


Exceeding
1,000,000
and not exceeding
1,500,000
30


Exceeding
1,500,000
and not exceeding
2,000,000
32


Exceeding
2,000,000
and not exceeding
—
34


I do not expect that the right hon. Gentleman will accept this Amendment. Even if he has sufficient money to accept it, I should hardly expect him to do so, because he has said frequently that this tax is a kind of capital levy which enjoys his special blessing. There are many people in this country who, whether the amount they may expect to inherit is large or small, regard this tax for many reasons as one of the most vicious in the whole of our financial system. In the first place, taking it from the point of view of the taxpayer, though it is rather easier to take it from the point of view of the family, this tax has the greatest evil of all taxes. It is a pure gamble. Ordinary taxation, Income Tax, Super-tax, Stamp Duties at least fall evenly on the individual. Every individual whose income exceeds £10,000 a year pays approximately the same rate of taxation, and has to find the same amount year by year in taxation. Take the case of Death Duties, however. A man leaves an estate of, say, £100,000. The State reduces it to £81,000. His successor may have the misfortune to be killed a year after, and the State takes 18 per cent. from that and leaves £66,420. In another case the man who succeeds to the £100,000 estate may easily survive 20 or
30 years and the estate will in that case continue to be £81,000, assuming there is no increase or decrease. It seems to me that a tax which may produce such extraordinarily different results in a few years, when you start with the same amount of capital money, is logically indefensible in any system whatever. Why the right hon. Gentleman should single out this special tax for his special affection is beyond me.
That is the first fault of this tax, and now I wish to say a word on its social and economic effects. They are important. I must remind the House that it is some time since we had a Debate on this subject. Ordinarily under the Finance Bill the question of debating Death Duties can only be brought up on a new Clause and these new Clauses have a knack of arriving at an early hour of the morning when the Committee is tired and it is impossible to have suitable discussion on the subject. I am grateful to the right hon. Gentleman for this only, that by putting down this Resolution he has at least enabled us to debate it this time at a reasonable hour. One of the effects of this tax on Death Duties is that you are taking away from the capital of the country every day and using it as income. We all know what happens to the individual who, finding his income not sufficient for his needs, says, "I will draw on my capital" and sells a few shares. In due time the income does not increase, and the individual finds himself getting closer and closer to the bankruptcy court. I do not think there is any difference between the law relating to human beings and that relating to nations. A nation cannot go on spending its capital and living on its capital without ultimately diminishing the amount of capital it enjoys, and capital is one of the things which we need to-day. To spend any portion of that capital as income seems to me to be suicidal folly.
The only possible justification that I can see for a tax of this kind is in order to meet the Sinking Fund, because in that case it is true that you are taking capital from one section and using it to repay a capital debt. If the right hon. Gentleman had confined his collection of Death Duties to such a figure as would have brought in exactly the amount required for the Sinking Fund-about
£55,000,000 at the present moment—he would have had a very good case to justify his Amendment. I do not know whether my Amendment would produce that figure. I have not worked it out, but it seemed to me that roughly cutting down the total amount one-third should bring approximately what was needed by the Sinking Fund at present. I refer to the ordinary Sinking Fund under the Finance Act, 1928. I am not including in my calculations the £5,000,000 extra which the right hon. Gentleman is putting on this year, as that seems to me to be a piece of unnecessary legislation.
I wish to refer to the effect of Death Duties on land very briefly because other hon. Members wish to deal with it. One of the effects of heavy Death Duties is inevitably to break up landed property. You have got to pay Death Duties, and the only thing out of which you can pay it in many cases is by a sale of the property. The effect of that has been disastrous to agriculture. Very often the sitting tenant has to find the capital needed to prevent his leaving his farm, capital which would have been far better spent upon the land, but which is being used for the purposes of taxation. There are far more serious economic and social effects. Take the case of a manufacturing business owned by two or three partners and not a limited company. One of the partners dies. What is going to happen? The Chancellor said the other day that the bulk of the capital of this country is represented by buildings, machinery and things of that sort.
What is the position of the unfortunate firm, one of whose partners has died and who has to find these heavy Death Duties? Although the capital consists of these buildings and machinery, if they were to say to the Chancellor of the Exchequer, "Here is our capital consisting of these buildings and machinery. We offer you one or two of the machines," he would not be grateful. I do not think he has power to accept such an offer, but, if he did, the Treasury would not be grateful to him. What is that business to do? Those who own it can either sell the business to somebody else, probably a limited liability company, or go to the bank and borrow the money to pay those debts on the business. The effect is that a heavy mortgage has been
placed on the business, and that the bank will have a great deal more to say about the business than the people who own it, which will be a thoroughly bad thing from the point of view of the public, of trade, and, last but not least, of the employés.
Any taxation that is likely to have that effect, however tempting it may be to the Exchequer for the moment as a method of raising revenue, is socially disastrous to the country. Taxation of this kind is causing the extinction of the private firm and compelling businesses to turn themselves into limited liability companies, whether they like it or not. I do not believe that the compulsory form of limited liability company is one that is good for the trade of the country or one that ought to be encouraged by our taxation, and this form of taxation is encouraging it. It has been truly said that a corporation has neither a body to be kicked nor a soul to be damned. There are many complaints that in businesses to-day you do not get that human relationship between employer and employed which distinguished many of the older private firms. You are now dealing more with the general manager, who is responsible to the shareholders. I cannot think that that is good for the country or for the employés. Anything that tends to cripple personal initiative is bad all round. By this form of taxation the Chancellor of the Exchequer is loading the dice against the individual and in favour of the joint stock companies. That is one of the worst features of this tax.
Another effect of the tax is that it tends to deplete the source of revenue. Chancellors of the Exchequer for some years past have found, to their surprise, that Income Tax and Super-tax has not quite come up to expectations. The high rate of Death Duties has had a good deal to do with that, because you cannot break up these large fortunes and then expect to be able to get the same amount by taxing large incomes; the incomes will not be there. If the Chancellor of the Exchequer adopts this system in order to effect some form of distribution of the wealth of this country, he will inevitably be bound to seek some other method, and I think he will find that, in his difficulty, he will have to go in for a general import duty all round, because
there will be no other method of financing an expensive Government.

Mr. SMITHERS: I beg to second the Amendment.
I want to make it clear at the outset that I am not here to plead the cause of the squealing capitalists. I am here to deal with the question of Death Duties as being vicious and against the best interests of the Treasury, the State and the people. When the Chancellor of the Exchequer made a broadcast with respect to his Budget he referred to it as an inevitable Budget. I would ask him whether Death Duties are included in the word "inevitable." If they are so included, and if the Death Duties are to be increased and are to go on increasing, it means inevitable disaster for the country and for the people. Death Duties are wrong in principle because they take the capital of the country and use that capital for income purposes. The Chancellor of the Exchequer said the other day: "I believe that the distribution of wealth calls for reform." One of his more extreme colleagues, the First Commissioner of Works, speaking at West Ham, said that the Government were going to take more money from the rich by taxation, and in that way they would raise the standard of living of the people. No more cruel and fallacious gospel was ever preached to the people of this country. In view of these two statements, we may take it that the policy of the Government is, in some measure, to use its political power for the distribution of wealth. The increase of the Death Duties is intended to serve a double purpose, first, to raise money and, secondly, to materialise a political theory.
What is the Chancellor of the Exchequer's real opinion about the distribution of wealth by means of increased Death Duties? I am afraid that the right hon. Gentleman sometimes speaks with two voices. The other day, when he broadcast to the United States, he complained bitterly that our people are the most heavily taxed in the world, and that Income Tax of 4s., Super-tax running up to another 6s. and Death Duties amounting, as they did then, to 48 per cent. no more than provided two-thirds of the annual debt charges, war pensions and the Fighting Services. He went on to say:
With such a burden as this upon our shoulders, with all the destruction, all the waste, all the sacrifice, all the disorganisation of industry and society that it implies, is it any wonder that we have suffered industrial depression after the War.
T have had many occasions to be grateful to the Chancellor of the Exchequer for kind advice and friendly help and I am sorry for him, because circumstances have put him into the position of being—I do not say that he is one—a hypocritee. He has to come to this House and to try to carry out political theories, but when he gets on to the Front Bench and has the responsibility of office he finds that it is impossible to carry out the theories that he and perhaps some of his more extreme friends put forward in a forceful manner in the last election. If the Chancellor of the Exchequer believes in the distribution of capital, why does he not carry out the recommendation of the Divisional Council of Lanarkshire at the Independent Labour Party Conference, and put the Death Duties at 100 per cent., and have done with it? He knows that he cannot do it. He knows that that would mean ruin to the country, and I do not believe that his advisers at the Treasury would, if I may say so with respect, allow him to do it. He takes a line which other men have to take when they are in a difficult position, he compromises, and instead of following the advice of his extreme friends and putting the Death Duties at 100 per cent. he goes half way and puts the Death Duty at 50 per cent. on the large estates, so that instead of entirely ruining the country he only partly ruins it.
The right hon. Gentleman referred, the other day, to the wonderful way, speaking broadly, in which Budget expectations have been fulfilled in the past 10 years, but I would remind him that the word "Budget" has something to do with the future, and I can assure him from my own personal experience in the City that the confidence of the country has never been so severely shaken as it is to-day. I think that his expectations for the future with regard to his budgeting will be falsified. It has always been my opinion of the Chancellor of the Exchequer that when he was faced with the unpleasant duty of taxing someone to meet the annual expenses of the country, he went on the principle of how he could best raise the money and, at the
same time, do as little harm as possible to industry. By increasing the Death Duties, the Chancellor of the Exchequer is actuated not by the principles of sound finance but, to placate some of the extremists of his party, he is introducing vindictive legislation. He is breaking the first principle of sound business by using capital for income and revenue purposes. By tightening up the Death Duties, the Chancellor of the Exchequer is making a deliberate attack upon the capital resources of the nation.
I do not expect that this Amendment will be accepted, but when this Government or any Government introduces legislation which we who have some business experience believe to be vicious and harmful to the people, we must at least put on record our opposition and do what we can to bring to the notice of the public and of this House the real danger of legislation of this kind, and try to educate the public and the House with respect to these dangers. In helping this educational process, I want to pay a tribute to the "Times" newspaper for the public-spirited way in which it has called attention to the viciousness of the Estate and Death Duties. The "Times" has given this Government a very fair Press ever since they have been in office, but they do not flinch from publishing leading articles and correspondence which call attention to the danger of increasing Death Duties. I will quote from a leading article in the "Times":
So long as he is feeding upon his seed corn, the improvident peasant may continue to grow a little fatter, but all too soon he starves. This elementary principle, the neglect of which is the fundamental fallacy of Socialism, whether in our time or in the future, applies not merely to Death Duties as such, but to all forms of excessive taxation upon income.
Death Duties are applicable to all kinds of estates. If Death Duties have to be imposed, some estates can stand them better than others. A great deal depends on how the money is employed prior to the death of the person whose estate is the subject of Death Duty. One of the most serious criticisms of the imposition of increased Death Duties is that there is no differentiation and no consideration given, whether a particular industry can stand the depletion of its capital resources or not. Have hon. Members read Lord Lothian's letter in the
"Times" on 1st May? That letter dealt with Death Duties on landed estates from which no income had been received for many years. That letter did not contain any politics. It was full of hard facts and common sense, and if the hard facts and common sense in that, letter are ignored much longer, the day will be even further off when we can do something substantial to help the poorer people of the country and to cure unemployment.
I should like to ask the right, hon. Gentleman the Chancellor of she Exchequer another question. Would it be possible for the accounts of the State to be so presented that capital and income may be distinguished more clearly? It is suicidal to take capital by means of Death Duties out of the landed estates and from the agricultural interests and to spend it as current revenue, mostly in towns. The simplest way in which I can bring home my objection to Death Duties is to take a concrete example, the case of an estate of £2,000,000. It does not matter whether the estate is £2,000,000 or £200; the principle is the same, and it is equally harmful to the community and to the State. Up to the time of the man's death, the whole of that £2,000,000 was in use as capital and was invested in some form of business. When I hear certain hon. Members opposite jeering at people who have a lot of money, I would remind them that money is not kept in old stockings or boxes under the beds, but that it is being used to keep the oil working in the wheels of industry. That £2,000,000 of capital was earning taxable income from which the State benefited in Income Tax and Super-tax, and it produced a yearly revenue. This income was spent in wages, in the purchase of goods, and was distributed each year. It increased the purchasing power of the country and was life-giving. Estate duties are rightly called Death Duties, because it is their duty to deal economic death to the country. Any surplus of the income from that £2,000,000 was reinvested and added to the capital resources of the country.
The man dies and the estate is valued for probate purposes at £2,000,000. His executors examine the estate; they have to realise enough to produce £1,000,000, and the proceeds have to be handed to the Treasury, who use them as part of their income for one year. The effect is
that £1,000,000 worth of the capital of the country has been extracted and used for revenue purposes for one year. The State in theory has no money; it has only statutory power to collect from the citizens enough to balance the Budget for the year. Therefore, it is of the utmost importance for the Chancellor of the Exchequer not to hurt or to wound those from whom he and his successors have to draw their revenue. The earnings of the country are being squandered, and the sources of supply will inevitably dry up in time. Private business is run on quite different lines. It tries to save something out of income each year to reduce its capital liabilities, to renew plant and to become efficient. I do not say that the finances of the State and those of a private company are altogether comparable, but the principles which have brought success to private companies cannot be ignored by the right hon. Gentleman the Chancellor of the Exchequer when he is dealing with the finances of the nation.
There is only one excuse for levying Estate Duties, and it is that they should be applied to the extinction of the national debt. I have gone to the trouble to find out the amount that the State put to the Sinking Fund and the amount that it received from Estate Duties during the last 10 years. In 1920–21 the amount put to Sinking Fund was £19.2 millions and the amount received from Death Duties was £47.73 millions. In 1921–22 the figures were: Sinking Fund £22.9 millions and Estate Duties £52.19 millions; in 1922–23 Sinking Fund £21.8 millions, Estate Duties £56.87 millions; in 1923–24, Sinking Fund £40,000,000, Estate Duties £57.80 millions; in 1924–25, Sinking Fund £45,000,000, Estate Duties £59.45 millions; in 1925–26, Sinking Fund £50,000,000, Estate Duties £67.32 millions; in 1927–28, Sinking Fund £65,000,000, Estate Duties £77.31 millions; in 1928–29, Sinking Fund £57.5 millions, Estate Duties £80.57 millions; and in 1929–30, Sinking Fund £47.75 millions, Estate Duties £79.77 millions.
Every year in the last 10 years the State has received more in Estate Duties than it has put to the Sinking Fund, and the total of the last 10 years shows that £211,000,000 more has been received in Estate Duties than was put to Sinking Fund. That £211,000,000 of capital has
been taken out of the fructifying pockets of merchants and traders and has been used and squandered by different Governments for many services with which I do not agree. [An HON. MEMBER: "Education."] Education, like all social services, is desirable if we can afford it. We are still living in a post-War period, and we have still to pay for the War, and it may be that we cannot afford, in consideration of our other liabilities, to spend more even on education. I yield to nobody in my desire to improve the social conditions of the people of this country. Many hon. Members in this House think that the revenue from Death Duties is helping to attain that end. I honestly believe that they are wrong, and that the increase in Death Duties, because it takes away capital, puts off the day which we all desire to see when our prosperity will return and when unemployment will disappear.

Sir H. O'NEILL: The hon. Member for Chislehurst (Mr. Smithers), who has just spoken, devoted a large part of his remarks to the fact that the proceeds of the Death Duties, which are the capital of the nation, are devoted to the ordinary current revenue. He rightly says that this is a very undesirable state of affairs. I am sure that nobody would agree with that as a principle more fully and more freely than the Chancellor of the Exchequer himself. However, although it is a perfectly correct economic principle, I cannot help feeling that in the present state of affairs it is a counsel of perfection which is not in fact attainable. After all, all parties for the last 10 years have used the revenue from Death Duties for current expenses. I am sure that nobody more than the right hon. Gentleman the Chancellor of the Exchequer would like to devote this entirely to the purposes of the deficit. Although it is an ideal which we ought to aim at, I doubt whether it is at the present moment within the sphere of practical politics. I have always looked upon the Death Duties as being probably unique as a taxation system almost in the world. I have not studied in detail the taxation systems of other countries, but I should very much doubt whether there is in any other country of the world to-day such a colossal, continuing capital levy as the Death Duties in fact are. At the begin-
ning of 1919–20, the Death Duties have produced £691,000,000.
I have taken out the figures with regard to Income Tax, Super-tax and Death Duties, and perhaps the House will be interested to hear what they are. The total amount of income coming under assessment for Income Tax purposes in the year 1921–22 was £2,260,000,000. In 1927–28 it was £2,416,000,000. The total of the incomes liable to Super-tax in 1920–21 was £522,000,000, and in 1927–28, £531,000,000. In other words, the total amount of income assessable for Income Tax and Super-tax has, roughly, remained stationary during the past 10 years, but what do we find with regard to the Death Duties? The total amount of the capital value of estates brought under assessment in 1920–21 was £391,000,000; in the year 1928–29 it was £525,000,000. The progress has been continuous and increasing year by year. While Income Tax and Super-tax have remained about stationary, the amount of property assessable for Death Duties has increased in 10 years by 33⅓ per cent. What does that mean? It means that the income which produces Income Tax and Super-tax becomes taxable the moment it is earned or created, but as regards Death Duties, through the natural process of death, which takes place at unexpected times, we have been gradually and in increasing measure obtaining the results of the greatly increased fortunes which were made during the War. I have not seen the figures but I gather that in last year, 1929–30, the amount of property assessable for Death Duties must have been slightly less than the amount in previous years, because the product of Death Duties in 1929–30 was slightly less than it was in 1928–29.
My point is that we must have reached the peak, as regards the productivity of the capital which is assessable for Death Duties. The amount of such capital is bound to go down in the next 10 or 15 years. Unless we can replace in the hands of individual rich men the amount of money which has been paid away in Death Duties, we have passed the peak and the productivity of Death Duties is bound to be decreased. Accumulations of capital in the hands of smaller people may, and probably do increase the resources available for industry. There are
insurance companies and building societies and other forms of saving and those savings find their way into productive industry, but small accumulations of capital, in the hands of small people, are no good whatever for the purpose of revenue from Death Duties. Practically speaking, that revenue is only got out of the larger estates. This is essentially a tax on the big rich man and not on the smaller estates, and therefore replacement in some form or other in the hands of equally rich people, is necessary unless the productivity of Death Duties is to go down. Yet this is the time chosen by the Chancellor of the Exchequer for a very steep increase in the rate of Death Duties. The Colwyn Committee report says with reference to Death Duties:
We may say at once that in our opinion the rate of Estate Duty on large estates is, from the point of view of the effectiveness of that rate, already dangerously high.
That was written, I think, in 1927—at any rate before the present increase. As regards the question of avoidance, it has been said many times in the course of these Debates that you cannot get these great big chunks of direct taxation out of the taxpayer unless you carry with you his goodwill and unless he is going to pay willingly. The Colwyn Committee thought that the Death Duties were dangerously high two years ago. I suppose there are rich men—I do not think this is likely to be a general result but it is quite conceivable—who are without dependents, and who may say to themselves that if a quarter or a third or a half of their fortunes are to be taken away, they are going to spend the capital while they live. A man may say, "I am going to get what I can out of it." We only live once, and there comes a point in life at which the taxpayer may say, "This is not good enough, and I am going to adopt what methods I can to avoid this tax." Of course, there are other methods of avoidance, but that is the real danger. The Colwyn Committee, summing up their discussion of the Death Duties, say:
The physical effect of Estate Duty on saving appears to be severe and to be more damaging than that of the existing Income Tax. The same is true, although to a lesser degree of the physical effects of Estate Duty on enterprise.
It is chiefly from the larger estates that the new capital of the country can be obtained. The smaller property owner
has not the same opportunities of saving or the same margin out of which to save as the large owner of capital, and therefore it seems essential that the State, instead of trying to penalise almost out of existence the man of enterprise, initiative and ability, who has built up a large estate, should realise that it is out of the large estates that the bulk of the new capital of the country must come. The report recently issued by a committee of the Trade Union Congress appointed to consider the effect of taxation on prices and unemployment used these very significant words:
However desirable it may be to secure a fairer distribution of wealth it is fatal to national prosperity to eat up that capital which is necessary to finance present and future production.
That summed up in a very definite and remarkable way the effect of this tax. There is one point with which I should like the Chancellor of the Exchequer to deal in his reply. Some hon. Members have referred to the particular hardship of these duties in the case of agricultural property. Is it the intention to maintain the remissions given to agricultural policy in the Budget of 1925, and, if not, what is the proposal of the Government? Is it proposed that agricultural property should come exactly under these rates, or that there should be a proportionate increase of existing rates, or that it should remain as it is? I do not think that that point has been made clear, and, even at this early stage of our financial proceedings, we should have some enlightenment on it.
The other day the right hon. Gentleman, replying to criticisms on his Budget, said he could say a great deal about the social effects of the Death Duties, quite apart from the production of revenue. This would not be the occasion to go into the social effects of the duties in detail, but quite apart from all other considerations, the weight of these duties is having a very marked effect upon the whole structure of rural life. Capital which might go into the agricultural industry is being dissipated. Estates are being sold and ties, formed possibly centuries ago, in the agricultural districts are being broken. The hon. Member for Bridgeton (Mr. Maxton) said the other day that if the agricultural landowners were selling their estates, the working-
class people of Glasgow were selling their houses. That may be so. I do not deny it, but at any rate it is clear that, even though the Death Duties have brought about this change in our agricultural districts, they have not, in so doing, helped the poorer people in the towns who are suffering to-day from unemployment and trade difficulties just as much as, if not more than they were, some years ago. Although these duties provide a remarkable revenue-producing weapon, it is a weapon which may break in the hands of a future Chancellor of the Exchequer.

8.0 p.m.

Mr. P. SNOWDEN: The hon. Member who submitted this Amendment said quite frankly that he did so, not with any expectation that it would be accepted, but as a convenient peg on which to hang a general debate on the question of these Estate Duties. His own speech and subsequent speeches have certainly followed his expectation in that respect. We have had no reference whatever to the Amendment, but we have had very exhaustive arguments about the evil effects of the Death Duties, the breaking up of large estates, the dispersing of old families, the difficulties which private business firms experience on the death of the sole proprietor in raising what is necessary to meet the Death Duties. I shall not attempt to answer this general case about the effect of Death Duties. We are already half an hour beyond the time at which we expected to finish this Debate. There are however, one or two points which have been raised and questions which have been addressed to me, to which it is only courteous that I should reply.
One thing which struck me very much in listening to the denunciation of Estate Duties altogether was this fact: Estate Duties have been raised three times since the War, including, of course, the present proposals. Two of those rises have been proposed and carried by Chancellors of the Exchequer in a Tory Government. The right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) made, I believe, the biggest increase that has ever been made in Estate Duties at one time. Of course, he had the very good excuse that he was trying to put the country in as substantial a position financially as it was possible to
do after the ravages of the War. The right hon. Gentleman the late Chancellor of the Exchequer (Mr. Churchill) raised the Estate Duty in 1925, when there was no such excuse. [An HON. MEMBER: "And reduced the Super-tax!"] That is exactly what I was going to say. He reduced the Super-tax and took the equivalent in Estate Duties. Why did he do that? Because he regarded Estate Duties as a much less pernicious form of taxation than Super-tax. I was in the House during the Debate, but I do not remember ever hearing a Tory Member get up and make such speeches as those to which I have been listening to-day. We heard nothing then about the ruin of the old families, the great injury to commercial concerns by increasing these Death Duties; and the fact that all these arguments have been reserved for an occasion when a Government of another party is making a comparatively modest addition to the Estate Duty makes one discount them to a very great extent.
This Amendment cannot be accepted; it is not expected that it should be. Let me say, however, that to accept it would cost £25,000,000 a year and would have the effect of reducing the rate of Estate Duty in some cases below the figure in the first year of the War and in some cases below the figure before the right hon. Member for West Birmingham made the increase. In regard to the question put to me by the right hon. Gentleman who spoke last about the position of agricultural land, if I do not propose in this Budget to alter the law in that respect it is purely as a matter of Parliamentary convenience. The Parliamentary programme is already tremendously overcrowded and one of my greatest concerns has been to keep the Finance Bill within manageable proportions. It has already extended to something like 50 Clauses and I have had to use the pruning knife very ruthlessly and take out a great many things that I would have liked to put in. It would be quite impossible to hope to get the Bill through in the time if these contentious matters were put in. That is the honest and simple reason why I am not dealing with the question of agricultural estates. It would have required another Resolution and altogether it might have meant two days of extra discussion on the Finance Bill.

Sir H. O'NEILL: Does the right hon. Gentleman mean by that that the rates on agricultural property will remain as they are to-day?

Mr. SNOWDEN: Of course, but the right hon. Gentleman is aware that agricultural estates are divided for purposes of valuation for Estate Duty into two parts, the purely agricultural value and the value in excess of that value, i.e., the value for purposes other than agriculture. The increased rates will apply to what may be called the urban part of an agricultural estate.

Mr. HASLAM: I should like to express my gratification that the Chancellor of the Exchequer is leaving the duties on the agricultural parts of estates as they were left in 1925. I do not know whether the Chancellor is really desirous of accepting any expressions of gratitude, because he rather went out of his way to spoil the concession from that point of view by, as I understand him, saying that it was simply due to pressure on Parliamentary time that he did not propose this increase and not out of any regard to those engaged in agriculture. In fact I believe I have heard him on previous occasions state that he regarded the breaking up of the old landed system as a very excellent process and one which he thoroughly welcomed. The Chancellor said that the last increase of Estate Duty was in 1925, and that we of this party did not point out the capital loss and the detriment to the country in this enormous taxation. I do not know that the Chancellor is quite correct in that contention. I am quite certain that we who represent agricultural districts did press with all the vigour of which we were capable the very great detriment worked by these duties to all who were engaged in the industry of agriculture. It was because of these representations of the ruinous effect on agricultural districts of these heavy withdrawals of capital that a coneession was made by my right hon. Friend the Member for Epping (Mr. Churchill).
We have seen in the last 20 years the breaking up of big estates and the transference of farms to others than the original owners. Does the House really consider that the effects are beneficial all round? Many of those who have been compelled to buy their farms find them-
selves to-day in the very greatest difficulties. It means that the capital which they would otherwise employ as farmers in stocking their farms, on implements and so on, has had to be tied up in the purchase of land; they have had to borrow money, they are in the hands of the bankers, and, in particular, in numbers of cases where these purchases were carried out under the inflated prices which ruled during and immediately after the War, the purchasers are in great financial difficulty to-day. Hundreds and thousands of them are only sighing for the day when they might return to the state of having a landlord. After all, the industry of agriculture for centuries has run on the basis of three parties, landlord, tenant and agricultural worker. The prime function of the landlord has been to supply capital, and I do not think that the greatest enemy of the landed system would deny that the landlords have supplied capital in the past at an extraordinarily cheap rate of interest for the purpose of farming.
These heavy extractions of Death Duties have prevented keeping the capital in the land and have caused the rate of interest on capital to be very much higher than it was in the old days. The State itself has had to come in, and we have had to have agricultural State credits and banks. That, I maintain, is due to this system of continual extraction of large sums of capital from the agricultural industry, from the individual who exists to supply it. If the scale proposed by my hon. and gallant Friend the Member for Oxford (Captain Bourne) were applied to agriculture and agricultural estates it would, I feel confident, assure farmers and agriculture generally that capital could be obtained for rural industries at a very much cheaper rate than it can be to-day. It would place behind the farmer a landlord who was prepared to see him through bad times, and that, of course, is very much needed at present. Therefore, I deplore the fact that the Chancellor of the Exchequer will not accept this Amendment, particularly on account of the disastrous effect on the agricultural industry.

Mr. MANDER: The right hon. Gentleman who spoke just now from the Conservative benches referred to the fact that it was not known what the incidence of Death Duties was in certain foreign
countries, and I hope that the Chancellor of the Exchequer will see his way to give the information for which I asked at Question Time to-day, as to the relative rates, not only of Death Duties, but of other taxes on income in the countries of certain of our foreign competitors. It is perfectly clear that, however desirable taxation by way of Death Duties is, you cannot go beyond a certain length, and, if other countries are a long way below our rate of taxation, it is taking a very great risk indeed to go on increasing the rate of taxation in this country. It seems to me that the Chancellor of the Exchequer is making use of the procedure of the Budget to redistribute to some extent the national wealth of this country, and I am bound to say that I am very glad that he is. It is because of his doing so that I gladly support this Motion to-day.
After all, there are hundreds of thousands of people in this country who, through no fault whatever of their own, have hardly a penny in the world; and there is a considerable number of people who, really through no merit of their own, have hundreds of thousands and millions of pounds. In the presence of a state of affairs like that, it seems to me to be essentially fair to take as large a proportion as possible from inherited wealth. A man who inherits a million, a quarter of a million, or a hundred thousand pounds, that being what is left after taxation by way of Death Duties, is a very lucky man indeed. It would be quite a different state of affairs if every man and woman in this country were living in comfort and ease; then there would be a very much stronger argument for not applying these heavy Death Duties; but in the existing situation of the country, when money has to be raised for social and other purposes, I think that the Chancellor of the Exchequer is perfectly entitled to make a levy of this kind.
While there are many dodges which people adopt, and which are going to be prevented by the present Budget, there are certain things that people can do to avoid the payment of Death Duties. There is nothing to prevent a man from handing over in a perfectly legitimate way a certain proportion of his estate to his children or other relatives. That effects a certain
redistribution of wealth. It is largely done, and it probably will be still more largely done after this Budget. I cannot think that there is any real objection to it. It is one way of avoiding these very heavy duties. However unpleasant these taxes are to people who are going to be affected by them, and they are naturally very unpleasant—we should all greatly prefer to have our income untouched, and to have to pay no Death Duties at all when we die—nevertheless, seeing that money has to be raised, they are essentially just and reasonable, and for that reason I heartily support them.

Viscount CRANBORNE: I only propose to deal with one point which has been raised. One line which seems always to be taken by hon. Members opposite, and which was taken by the hon. Member for East Wolverhampton (Mr. Mander), who has just spoken from the Liberal benches, is that, whenever the Conservative party complain of an increase of taxation, we are thinking of our own pockets. Hon. Members opposite are taking the national point of view. The Chancellor of the Exchequer took it, and I noticed that the Financial Secretary to the Treasury had a rather malicious twinkle in his eye the other day when he took the same point of view. We feel that it ill befits hon. Members opposite to talk too much about the national point of view. They often refer to themselves as a class partly, meaning that they represent the working class. We should not agree absolutely to that; we think that we represent the working class just as much as they do. At the same time, they are undoubtedly a sectional party, and they represent the urban point of view.
That is quite natural. The large majority of them were brought up in towns and industrial districts, and they know all about them and take a great interest in them, but they know nothing, or very little, about the countryside, and they care less. They always subordinate the interests of the countryside to the interests of the town. I am an agricultural Member. I have lived in the country, and represent an agricultural constituency. We in the country—and this, I think, applies to the whole agricultural community—maintain that taxation such as this does not help anyone in
agriculture, that it helps neither the landlord nor the farmer nor the labourer. There has been a great deal of talk about a letter which was written by Lord Lothian, and I noticed that when it was mentioned this evening many hon. Members opposite smiled. I do not know why they smiled—whether it was that they did not believe in what he said, or whether it was that they thought that it was of no importance; but the facts stated are absolutely correct, and any number of similar facts can be found in regard to other agricultural estates.
I would ask hon. Gentlemen opposite to think quite sincerely if there is anyone in the agricultural community who can benefit by this heavy increase of Death Duties, or by Death Duties as a whole, on a large scale, at all. The Chancellor of the Exchequer, speaking just now, said something about this being the third increase since the War, the other two having been made by Tory Chancellors. He seemed to think that that made it right, and he was very complimentary about it. I do not agree any more than I did before. I think that it was wrong of them, and of him too, and that he would have shown more originality, and, if I may say so with all due deference, more intelligence, if he had not followed their example in this respect.
To go back to the effects of the Death Duties on agricultural estates—and I am talking entirely about agriculture—there are, as has been said several times this evening, three branches of the agricultural industry. Firstly, there is the landlord, and I suppose no one will say that Death Duties are of any use to him. Then we come to the farmer. How can they help him? There are two sorts of farmer in the country—the man who owns his own farm, and the tenant farmer. I do not think that the increase of Death Duties hurts the man who is the owner of his farm. The increase of Super-tax, and of Income Tax, at any rate, does hurt him, and that very disastrously, but he is not affected by Death Duties. The tenant farmer, on the other hand, is disastrously affected.
After all, a farm does not run itself. In the case of an average farm, it is necessary to put a great deal of money into it every year. There is re-equipment to be done; there are new buildings
to be built; there are old buildings to be repaired; an immense amount of expenditure has to be incurred. Lately we have heard a great deal about the disadvantages of arable farming, and the desirability of a good many farmers putting land down to grass. That, however, does not merely mean sowing grass seeds and buying cows. An enormous amount of extra expenditure has to be incurred. New steadings and cow-sheds have to be built, covered yards have to be built, and there is a great deal of very heavy capital expenditure. Of course, that would be done in the normal case by the landlord, but if a landlord, having inherited an estate, has had to pay 30, 40 or 50 per cent., according to the size of the estate, he cannot put in that extra capital which otherwise he would have put in.
There is another point. In ordinary bad times, when things have been bad for some time, the landlord will always put down the rent. I know that some hon. Gentlemen would not believe that, but it is honestly true, and it has been done a great deal during the last two or three years. The landlord stands in very much the same relation to the farmer as a reserve does to a company. It is a reservoir of wealth which is filled up during good times and, during bad times they can draw upon it. That reservoir has been empty for a very long time now, but latterly a certain number of landlords have been able to draw on other sources of wealth and fill it up in that way. Now the reservoir is getting emptier and emptier and there is nothing to draw upon. Farmers have nothing to gain by this taxation.
Of course, the labourers are wrapped up with the farmers. It is more obvious in this than in the larger industries with which hon. Members opposite are more closely acquainted, but if a farmer is not prosperous, if the industry is in a bad way, obviously the labourer's wages cannot be good. At present they are a miserable pittance for him to live on, but they are really quite as much as or more than can be paid in the present economic conditions. If there is to be an improvement, the industry must prosper, and it will not prosper if you take away the capital out of which improvements ought to be made. There is the question of agricultural housing in which hon.
Members opposite are immensely interested. You cannot build an agricultural labourer's cottage in the part of the world where I live under £380 to £400 or, deducting the subsidy, £320. The landlord gets for that cottage 3s. a week, of which 2s. goes in rates and taxes. That leaves a shilling, or three-quarters per cent. on his outlay, out of which he has to pay for repairs and improvements. There is a dead loss on agricultural labourers' cottages.
You cannot expect any improvement in rural housing if you continue to bleed the industry as you are doing now. I do not think hon. Members opposite realise the position. They think we are pulling a very long face and crying crocodile tears when we talk about the condition of the agricultural districts, but the Chancellor of the Exchequer and the Financial Secretary ought to know, because they can get the information out of their Treasury officials. It is honestly true that what in fact you are doing is sweating the agricultural districts and grinding down the agricultural labourers in order to provide the urban workers with additional comforts and, for that reason, we oppose whole-heartedly this increase of taxation.

Lieut.-Colonel GAULT: In supporting the Amendment, I should like to say that I have every sympathy with the Chancellor of the Exchequer in his difficult task of framing the national Budget, but I am convinced that there is no item amongst his proposals which deserves more adverse criticism than his proposal to increase the Death Duties, which is a direct charge upon the capital wealth of the country, at a time when, instead of decreasing our national wealth, we should be endeavouring to increase it in order to provide for the needs of our growing community and to provide the sinews for a virile and healthy industry upon which the welfare of our people depends. It is true that in extraordinary circumstances, and in a national emergency, the State may be justified in drawing upon its capital resources to meet the requirements of its current expenditure. Such a time unquestionably was the recent War, when the nation had no other course to pursue than to make great inroads into its capital wealth in order to prosecute to a successful conclusion the War in which it was engaged. But 12 years have elapsed since that time and,
notwithstanding the difficult situation with which we are confronted to-day, a situation largely aggravated by the social and industrial disorders brought about by the Socialist party in 1926, the time has arrived to call a halt to drawing further upon our accumulated wealth in order to meet the requirements of our current expenditure.
Were the amount raised by the Death Duties, which is really a capital levy, to be entirely allocated to the redemption of debt, I should not object as strongly as I do to their continuance, but we are to-day the most heavily taxed nation in the world and, instead of reducing our taxation, as most other countries are doing, we pursue the futile policy of increasing it, which must inevitably lead to our being unable to compete successfully in the markets of the world against foreign competitors, and must end, like a rake's progress, in national bankruptcy and ruin. I welcome what the Chancellor of the Exchequer has said in regard to not adding to the Death Duties upon agricultural land. I should like to make one or two references to the incidence of the Death Duties upon the depressed agricultural industry.
The estate of a deceased person consisting of shares and bonds can usually be readily liquidated for the purpose of meeting the demands of the Exchequer, but an agricultural estate must perforce be broken up to meet exorbitant demands, frequently involving the breaking up of an economic unit, and invariably forcing the farmer, impoverished by the lack of a protective policy for his products, and none too well blessed financially at the best of time, to buy in his farm to protect himself and to maintain his home. I hold no particular brief for the landlord system, for until recently my whole experience was of the owner-occupier system, but under the landlord system the farmer not only has the great advantage of the help of a resident landlord free of charge, but gets his land on a rental of, let us say, 2 per cent., whereas if he is to assume the responsibility of ownership himself, the rental charge cannot be put on a financial basis of less than, let us say, 5 per cant., involving, as it does, a higher overhead cost of production or products on which, as the result of the country's lack of policy,
he is unable to make a fair profit. In the case of an estate where there are a number of deaths in a short period of time, the owner has no other recourse than to sell his property, or pile on mortgage upon mortgage, which can but reduce his margin of capital wealth, and the country's margin of capital wealth as well for, judging by the number of properties for sale at bargain if not sacrifice prices today, the assets of the country have suffered enormous depreciation due to the country's declining wealth.
I know hon. Members opposite are prone to say that the landlord system has failed. If it has failed, it has failed because it has been driven out of existence by over taxation to the detriment of the countryside and of the whole of the agricultural industry, for there are few farmers who do not uphold the system which has proved a staunch friend to the industry in which they are engaged. The principle that the economically strong must carry the weak is one which meets with general approval to-day and it is one which I cordially support, but there is the inexorable law of diminishing returns to be remembered, and it must inevitably follow that if the economically productive are destroyed by over-taxation, the incidence of the Budget will eventually fall much more heavily than it does to-day upon the poorer members of society. From the returns and available statistics it is questionable whether increased direct taxation will bring the expected increased revenue to the Treasury, for already, under our present Government, the commercial and industrial credit of our country has been shaken and the bank rate, ever a sure barometer of industrial prosperity, has fallen with a corresponding increase in the unemployment figures of the land.
As a result of these overburdened Death Duties, there are few to day who can afford to die—in comfort. None of those who have devoted their lives to building up a fortune in order that their dependents may have a livelihood after their death can look forward to finding peace in the grave. I wonder whether the shades of those who will be called upon to pass on during this coming year will rise to haunt and point an indignant finger at the Chancellor of the Exchequer for having made miserable their last days upon earth? Truly the time has
arrived when the taxpayers of this country can rise and exclaim, in the words of that French patriot of 20 years ago, "L'etat est l'ennemi." The late Marshal Foch, when lecturing to the cadets at St. Cyr many years ago, laid it down that the principles of war never changed; that it was only the conditions of war that altered. That dictum can well be applied to civil life to-day and to the building up of national wealth, for the only high road to the building of wealth, whether it be national or individual, is clearly marked by the old-fashioned signposts of enterprise, effort and thrift—thrift which to-day has been so largely driven out of existence by the over-taxation of the land.
I often think that we in this House and in the country as a whole devote far too much time and energy to the question of the distribution of wealth instead of to the creation of wealth, and that if we reversed our practice, a great many of the economic problems and complexities, in which we find ourselves engaged would rapidly sink into the limbo of forgotten things, and that the nation would once more rise more prosperous and happier than it is to-day. What we want in this country is not a cheap vote-catching policy, but a sound constructive economic policy to save the nation from the financial ruin with which it is confronted to-day. I will say to the right hon. Gentleman the Chancellor of the Exchequer, who, I regret, is not in his place at the present time, that until the Government of this country embarks upon a policy of retrenchment and economy, and is capable of envisaging a wider economic unit in co-operation with the other component parts of the British Empire, I can see no hope and no future for England or its people.

Mr. SKELTON: I do not intervene at this moment to discuss the general principles of Death Duties. The time has long gone past when it is possible to bring forward as a practical contribution to financial political thought the proposition that capital taxation should be used only for capital purposes. I entirely agree with the right hon. Gentleman who spoke a short time ago in what he said with regard to the general observations of this afternoon and evening. I should like to attempt a rather closer analysis of
the danger points of the heavy duty upon wealth. There is practically no danger, until you get to the limit of taxation which is sheer confiscation, to the community as a whole when the wealth you are taxing is in the form of stocks and shares. It is unpleasant to have to give up one's wealth, or to watch wealth which might come to one being given up, but when you think of the welfare of the country no damage can be said to be done when wealth, in the form of stocks or shares, is sold by "A" and bought by "B" for the purpose of paying debts. It does not affect industry, at all events. That is the case where Death Duties, to whatever purpose they may be put by the State after they have been collected, are least harmful. But where you come to an estate which is not in the form of shares and not in a readily transferable, buyable and saleable form but in the form of business, it cannot be converted into cash without the sale of the business or some difficult complication with regard to the property. It is clear that Death Duties do affect industrial property.
There is even a worse case than that, and to it I wish to direct the attention of the House and of the Financial Secretary to the Treasury. I do not complain of the absence of the Chancellor of the Exchequer, whose human needs at this hour have to be satisfied as well as those of other persons, except those who are waiting to take part in the Debate. Death Duties come with severest force where you have an industry in which the wealth to be taxed is in the industry itself and where that industry is also depressed. That is why, in my judgment, Death Duties fall with such peculiar danger upon the community. I do not speak of hardship to the individual—I am not concerned with that—in the extraction of Death Duties from the land.
One is grateful for what the Chancellor said earlier in the Debate, namely, that he proposes to carry on the remissions to agricultural estates which were given in 1925, and I do not propose to suggest that agricultural land should be free from all Death Duties. I do not believe that under modern conditions these distinctions can be made, and the problem before any Government, if the evil effects of the extraction of Death Duties from agricultural land is to be minimised, is to find the method of extracting these
Duties, which does a minimum instead of a maximum amount of harm. That method consists in the taking over of the land instead of converting the land into cash. Since 1909 there has been a provision whereby the Treasury can take over land in lieu of Duty, but that provision was brought to nought by a Treasury Minute that it would not operate except where the land was needed for public purposes.

Mr. DEPUTY-SPEAKER: (Mr. Robert Young): We must not discuss Amendments which would need legislation.

Mr. SKELTON: That is so, and, of course, I bow to your Ruling, but may I say that throughout this Debate, to every word of which I have listened, the actual scale has not been the only topic under consideration? Indeed, the Chancellor of the Exchequer referred to the fact that the Debate had been upon a wider range. The observations which I propose to make can easily be brought within the terms of this Amendment; I trust that they can be, however, because, while the question of the effect of Death Duties upon agriculture and agricultural land has been widely touched upon to-day, the particular matter to which I seek to refer has not been dealt with. I do not expect to see agricultural land relieved from Death Duties, but I believe that it is possible to find a method of exacting Death Duties from agricultural land, which is less damaging. I well understand that the Treasury cannot be expected to become a landowner. Everyone who understands the functions of the Treasury and of the landowner—

Mr. DEPUTY-SPEAKER: I am afraid that I cannot allow the hon. Member to discuss that point.

Mr. SKELTON: I regret your Ruling, but I willingly bow to it. Let me, therefore, say that it is worth while the Chancellor's consideration whether the land cannot be put under a commission and taken over for the purpose of being handled in ways into which I cannot go, and whether that cannot be used as a method of minimising the disadvantages. The way in which the present exaction of Death Duties affects agricultural land has not been completely analysed. Where agricultural land is sold, it is sold either direct to the agricultural tenant or to a
land speculator. The burden to the agricultural tenant of having to purchase has been dealt with by previous speakers, but what has not been dealt with is the other alternative, namely, where the land is sold to a land speculator, in which case those who seek to purchase the land, either tenants or otherwise, find themselves having to pay largely enhanced prices.
Hon. Members who have any acquaintance with the subject will know that this is the case, and that the activities of the land speculators are most inimical to agriculture, and are made much easier by the fact that the Death Duties tall so heavily upon land. Take the case where a sitting tenant purchases. It was said by the hon. Gentleman who preceded me and by others, that the evil that arose in that case was that the tenant had to use in the purchase of the land capital which ought to be put into the cultivation of his land. In Scotland that situation is very much aggravated, because we have no system of long-term agricultural credits. The position is slightly less anxious in England as a result of an Act which was recently passed, but in Scotland there is no method of assistance whereby the sitting tenant can get capital which is needed to purchase land upon easy, long credit terms. That is a big disadvantage, but even in England the existing system of long-term credit is by no means equal to filling the bill for the purchasing tenant. The fact that land can be taken over by the State, and is not taken over—

Mr. DEPUTY-SPEAKER: We are discussing a Resolution which deals with the scale of rates and an Amendment lessening that scale. It is not a question of the purchase of land.

Mr. SKELTON: I hope that I am not going beyond the Rules of Order, but you will recollect that these topics have been touched on in the Debate by previous speakers. I do not think that I am going far wrong as long as I confine myself to an analysis of the results of the present scale of Death Duties. I am trying to point out that, as a result of the analysis of the effects upon agricultural land of the present scale of Death Duties, the absence of any proper credit system whereby the farmer who has to buy because of the present Death Duties—

Mr. DEPUTY-SPEAKER: The hon. Gentleman must know that that will need legislation.

Mr. SKELTON: I must confess that I did not realise that legislation would be necessary in every case, nor do I think that it would be necessary.

Major ELLIOT: On that point, is it not the case that the Finance Act, 1910, allowed land to be taken in lieu of duties, and that it was subsequently stated that a Treasury Minute forbade it to be taken? Would the hon. Member's proposals, therefore, imply legislation?

Mr. DEPUTY-SPEAKER: The hon. Member is advocating long-term credits, which do not arise on this Resolution.

Mr. SKELTON: I do not desire to offend against the Rules of Order, but it is somewhat difficult to deal with the effect of Death Duties upon agriculture in an adequate way and have proper respect to the Rules of Order. Let me say in conclusion—[Interruption]—and the conclusion will be a long one, and is not likely to be shortened by interruptions of that sort. The general proposition that Death Duties are burdensome in proportion as the industries upon which they fall are depressed is a proposition which can scarcely be countered, and they are burdensome in proportion as the wealth upon which they fall has to be converted into cash before the duties can be paid, when the wealth upon which they fall, unlike stocks and shares, is not easily converted into cash. In that case they fall the heaviest. I do not advocate an expenditure of the money raised by Death Duties exclusively for capital purposes, but I think, and I put it to the Financial Secretary and to the House generally, that the real problem for this Government or any other Government is not merely a concern as to the amount raised by the Death Duties, but whether there should no be different methods of collection applied in the case of different industries, methods suitable for the circumstances of the particular industry; and whether relief, if it is to be given, ought not to be given in accordance with the principle that the industry from which the duty is being
exacted is a prosperous or depressed industry. The question of the utilisation of the Death Duties solely for capital purposes becomes of comparative unimportance at a time when your national capital is increasing rapidly, and in the case of the individual whose capital resources are rapidly increasing I cannot imagine that he is doing himself any serious damage or controverting any economic law by using some of this increasing capital for purposes—

Mr. DEPUTY-SPEAKER: Really, the hon. Member is going far beyond the Resolution.

Mr. PYBUS: Is it not a fact that the hon. Member has been called to order five times by you, Mr. Deputy-Speaker, and would it not be a proper thing for him to resume his seat?

9.0 p.m.

Mr. SKELTON: If I have transgressed the Rules of Order it is not because of any want of respect either to you, Mr. Deputy-Speaker, or to the Rules of Order. Perhaps, somewhat unwisely, I have tried to analyse the effect of these Death Duties on depressed industries and particularly the depressed industry of agriculture. It is a topic to which a return must be made, it cannot be left entirely as of no importance. The situation of agriculture is far too dangerous and difficult to allow any aspect of it to be left unanalysed and unconsidered. The existing scale of Death Duties puts a quite unnecessary burden upon agriculture. That point I have put before the House, and it is a point to which I shall have to return. I resume my seat with this conclusion, and it is one which must never be lost sight of, that the finance of this country, like every other weapon of State, must in our time and in our day be directed above all to try to readjust the balance between town and country. Unless that balance is readjusted, the state of this nation is far from safe.

Question put, "That the words proposed to be left out stand part of the Resolution."

The House divided: Ayes, 259; Noes, 115.

Division No. 274.]
AYES.
[9.3 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Hall, G. H. (Merthyr Tydvil)
Naylor, T. E.


Adamson, W. M. (Staff., Cannock)
Hall, Capt. W. P. (Portsmouth, C.)
Newman, Sir R. H. S. D. L. (Exeter)


Addison, Rt. Hon. Dr. Christopher
Hamilton, Mary Agnes (Blackburn)
Oliver, George Harold (Ilkeston)


Aitchison, Rt. Hon. Cralgie M.
Hamilton, Sir R. (Orkney & Zetland)
Oliver, P. M. (Man., Blackley)


Alexander, Rt. Hon. A. V. (Hillsbro')
Harbord, A.
Owen, Major G. (Carnarvon)


Alpass, J. H.
Hardle, George D.
Owen, H. F. (Hereford)


Ammon, Charles George
Hartshorn, Rt. Hon. Vernon
Palin, John Henry


Arnott, John
Hastings, Dr. Somerville
Paling, Wilfrid


Aske, Sir Robert
Haycock, A. W.
Palmer, E. T.


Ayles, Walter
Hayday, Arthur
Perry, S. F.


Baker, John (Wolverhampton, Bilston)
Hayes, John Henry
Pethick-Lawrence, F. W.


Baldwin, Oliver (Dudley)
Henderson, Right Hon. A. (Burnley)
Phillips, Dr. Marion


Barnes, Alfred John
Henderson, Thomas (Glasgow)
Picton-Turbervill, Edith


Barr, James
Henderson, W. W. (Middx., Enfield)
Pole, Major D. G.


Batey, Joseph
Herriotts, J.
Potts, John S.


Bellamy, Albert
Hirst, G. H. (York W. R. Wentworth)
Price, M. P.


Benn, Rt. Hon. Wedgwood
Hoffman, P. C.
Pybus, Percy John


Bennett, Captain E. N. (Cardiff, Central)
Hopkin, Daniel
Quibell, D. J. K.


Benson, G.
Horrabin, J. F.
Ramsay, T. B. Wilson


Bentham, Dr. Ethel
Hudson, James H. (Huddersfield)
Raynes, W. R.


Bevan, Aneurin (Ebbw Vale)
Hunter, Dr. Joseph
Richardson, R. (Houghton-le-Spring)


Birkett, W. Norman
Jenkins, W. (Glamorgan, Neath)
Riley, Ben (Dewsbury)


Blindell, James
John, William (Rhondda, West)
Riley, F. F. (Stockton-on-Tees)


Bowerman, Rt. Hon. Charles W.
Johnston, Thomas
Ritson, J.


Broad, Francis Alfred
Jones, F. Llewellyn- (Flint)
Roberts, Rt. Hon. F. O. (W. Bromwich)


Brockway, A. Fenner
Jones, Henry Haydn (Merioneth)
Romeril, H. G.


Bromley, J.
Jones, J. J. (West Ham, Silvertown)
Rosbotham, D. S. T.


Brooke, W.
Jones, Morgan (Caerphilly)
Rowson, Guy


Brothers, M.
Jowett, Rt. Hon. F. W.
Russell, Richard John (Eddisbury)


Brown, C. W. E. (Notts, Mansfield)
Jowitt, Rt. Hon. Sir W. A.
Samuel, Rt. Hon. Sir H. (Darwen)


Brown, Rt. Hon. J. (South Ayrshire)
Kennedy, Thomas
Sanders, W. S.


Burgess, F. G.
Kinley, J.
Sandham, E.


Burgin, Dr. E. L.
Knight, Holford
Sawyer, G. F.


Buxton, C. R. (Yorks, W. R. Elland)
Lang, Gordon
Scrymgeour, E.


Caine, Derwent Hall-
Lansbury, Rt. Hon. George
Scurr, John


Cameron, A. G.
Lathan, G.
Shaw, Rt. Hon. Thomas (Preston)


Cape, Thomas
Law, A. (Rosendale)
Shepherd, Arthur Lewis


Carter, W. (St. Pancras, S. W.)
Lawrence, Susan
Sherwood, G. H.


Charleton, H. C.
Lawther, W. (Barnard Castle)
Shield, George William


Chater, Daniel
Leach, W.
Shiels, Dr. Drummond


Church, Major A. G.
Lee, Frank (Derby, N. E.)
Shillaker, J. F.


Clarke, J. S.
Lee, Jennie (Lanark, Northern)
Shinwell, E.


Cluse, W. S.
Lees, J.
Short, Alfred (Wednesbury)


Clynes, Rt. Hon. John R.
Lewis, T. (Southampton)
Simmons, C. J.


Cocks, Frederick Seymour
Lindley, Fred W.
Sinclair, Sir A. (Caithness)


Compton, Joseph
Lloyd, C. Ellis
Sinkinson, George


Cowan, D. M.
Logan, David Gilbert
Smith, Alfred (Sunderland)


Daggar, George
Longbottom, A. W.
Smith, Ben (Bermondsey, Rotherhithe)


Dallas, George
Longden, F.
Smith, Frank (Nuneaton)


Dalton, Hugh
Lovat-Fraser, J. A.
Smith, H. B. Lees- (Keighley)


Davies, Rhys John (Westhoughton)
Lunn, William
Smith, Rennie (Penistone)


Denman, Hon. R. D.
Macdonald, Gordon (Ince)
Smith, Tom (Pontefract)


Dickson, T.
MacDonald, Rt. Hon. J. R. (Seaham)
Snell, Harry


Dukes, C.
McEntee, V. L.
Snowden, Rt. Hon. Philip


Duncan, Charles
Macklnder, W.
Snowden, Thomas (Accrington)


Ede, James Chuter
McKinlay, A.
Sorensen, R.


Edge, Sir William
Maclean, Neil (Glasgow, Govan)
Stamford, Thomas W.


Edmunds, J. E.
Macpherson, Rt. Hon. James I.
Strachey, E. J. St. Loe


Edwards, E. (Morpeth)
Malone, C. L'Estrange (N'thampton)
Strauss, G. R.


Egan, W. H.
Mander, Geoffrey le M.
Sullivan, J.


Elmley, Viscount
Mansfield, W.
Taylor, W. B. (Norfolk, S. W.)


England, Colonel A.
March, S.
Thomas, Rt. Hon. J. H. (Derby)


Forgan, Dr. Robert
Markham, S. F.
Thurtle, Ernest


Freeman, Peter
Marley, J.
Tinker, John Joseph


Gardner, B. W. (West Ham, Upton)
Marshall, Fred
Tout, W. J.


Gardner, J. P. (Hammersmith, N.)
Mathers, George
Turner, B.


George, Rt. Hon. D. Lloyd (Car'vn)
Matters, L. W.
Vaughan, D. J.


George, Megan Lloyd (Anglesea)
Messer, Fred
Viant, S. P.


Gibbins, Joseph
Millar, J. D.
Walkden, A. G.


Gibson, H. M. (Lancs, Mossley)
Mills, J. E.
Walker, J.


Gill, T. H.
Milner, Major J.
Watkins, F. C.


Gillett, George M.
Montague, Frederick
Watson, W. M. (Dunfermline)


Gossling, A. G.
Morley, Ralph
Watts-Morgan, Lt-Col. D. (Rhondda)


Gould, F,
Morris, Rhys Hopkins
Wellock, Wilfred


Graham, D. M. (Lanark, Hamilton)
Morris-Jones, Dr. J. H. (Denbigh)
Welsh, James (Paisley)


Graham, Rt. Hon. Wm. (Edin., Cent.)
Morrison, Herbert (Hackney, South)
Welsh, James C. (Coatbridge)


Gray, Milner
Mort, D. L.
West, F. R.


Grenfell, D. R. (Glamorgan)
Moses, J. J. H.
Westwood, Joseph


Griffith, F. Kingsley (Middlesbro' W.)
Mosley, Lady C. (Stoke-on-Trent)
Whiteley, Wilfrid (Birm., Ladywood)


Griffiths, T. (Monmouth, Pontypool)
Muff, G.
Whiteley, William (Blaydon)


Grundy, Thomas W.
Muggeridge, H. T.
Wilkinson, Ellen C.


Hall, F. (York, W. R., Normanton)
Murnin, Hugh
Williams, David (Swansea, East)




Williams, T. (York, Don Valley)
Wilson, R. J. (Jarrow)
TELLERS FOR THE AYES.—


Wilson, C. H. (Sheffield, Attercliffe)
Wise, E. F.
Mr. Allen Parkinson and Mr.


Wilson, J. (Oldham)
Young, R. S. (Islington, North)
Charles Edwards.




NOES.


Acland-Troyte, Lieut.-Colonel
Ganzonl, Sir John
Peake, Captain Osbert


Albery, Irving James
Gault, Lieut.-Col. Andrew Hamilton
Penny, Sir George


Allen, Sir J. Sandeman (Liverp'l., W.)
Gower, Sir Robert
Peto, Sir Basil E. (Devon, Barnstaple)


Baldwin, Rt. Hon. Stanley (Bewdley)
Grace, John
Power, Sir John Cecil


Balfour, George (Hampstead)
Graham, Fergus (Cumberland, N.)
Ramsbotham, H.


Balfour, Captain H. H. (I. of Thanet)
Grattan-Doyle, Sir N.
Rawson, Sir Cooper


Balniel, Lord
Greene, W. P. Crawford
Reid, David D. (County Down)


Beamish, Rear-Admiral T. P. H.
Grenfell, Edward C. (City of London)
Remer, John R.


Beaumont, M. W.
Gunston, Captain D. W.
Rentoul, Sir Gervals S.


Betterton, Sir Henry B.
Hanbury, C.
Roberts, Sir Samuel (Ecclesall)


Bevan, S. J. (Holborn)
Haslam, Henry C.
Ruggles-Brise, Lieut.-Colonel E. A.


Birchall, Major Sir John Dearman
Henderson, Capt. R. R.(Oxf'd, Henley)
Salmon, Major I.


Bourne, Captain Robert Croft
Herbert, Sir Dennis (Hertford)
Samuel, A. M. (Surrey, Farnham)


Bowyer, Captain Sir George E. W.
Hills, Major Rt. Hon. John Waller
Samuel, Samuel (W'dsworth, Putney)


Boyce, H. L.
Hope, Sir Harry (Forfar)
Sandeman, Sir N. Stewart


Brass, Captain Sir William
Howard-Bury, Colonel C. K.
Skelton, A. N.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hudson, Capt. A. U. M. (Hackney, N.)
Smith, Louis W. (Sheffield, Hallam)


Carver, Major W. H.
Hunter-Weston, Lt.-Gen, Sir Aylmer
Smith-Carington, Neville W.


Castle Stewart, Earl of
Hurd, Percy A.
Smithers, Waldron


Cautley, Sir Henry S.
Iveagh, Countess of
Somerville, D. G. (Willesden, East)


Cayzer, Sir C. (Chester, City)
Kindersley, Major G. M.
Southby, Commander A. R. J.


Chadwick, Sir Robert Burton
Knox, Sir Alfred
Stanley, Lord (Fylde)


Christle, J. A.
Lamb, Sir J. Q.
Stanley, Maj. Hon. O. (W'morland)


Coltox, Major William Philip
Lane Fox, Col. Rt. Hon. George R.
Steel-Maitland, Rt. Hon. Sir Arthur


Colman, N. C. D.
Law, Sir Alfred (Derby, High Peak)
Thomson, Sir F.


Colville, Major D. J.
Leighton, Major B. E. P.
Tinne, J. A.


Cranborne, Viscount
Llewellin, Major J. J.
Train, J,


Croft, Brigadier-General Sir H.
McConnell, Sir Joseph
Tryon, Rt. Hon. George Clement


Crookshank, Capt. H. C.
MacRobert, Rt. Hon. Alexander M.
Wallace, Capt. D. E. (Hornsey)


Croom-Johnson, R. P.
Maitland, A. (Kent, Faversham)
Ward, Lieut.-Col. Sir A. Lambert


Culverwell, C. T. (Bristol, West)
Meller, R. J.
Wells, Sydney R.


Davies, Dr. Vernon
Merriman, Sir F. Boyd
Williams, Charles (Devon, Torquay)


Davies, Maj. Geo. F. (Somerset, Yeovil)
Mitchell, Sir W. Lane (Streatham)
Windsor-Clive, Lieut.-Colonel George


Dugdale, Capt. T. L.
Morrison, W. S. (Glos., Cirencester)
Womersley, W. J.


Eden, Captain Anthony
Merrison-Bell, Sir Arthur Clive
Worthington-Evans, Rt. Hon. Sir L.


Edmondson, Major A. J.
Muirhead, A. J.



Elliot, Major Walter E.
Newton, Sir D. G. C. (Cambridge)
TELLERS FOR THE NOES.—


Erskine, Lord (Somerset, Weston-s.-M.)
Nicholson, Col. Rt. Hn. W. G.(Ptrsf'ld)
Major the Marquess of Titchfield


Fison, F. G. Clavering
Oman, Sir Charles William C.
and Major Sir George Hennessy.


Ford, Sir P. J.
O'Neill, Sir H.



Thirteenth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Sir L. WORTHINGTON-EVANS: I want to ask the Chancellor of the Exchequer a question upon this Resolution. It is difficult to deal with a Resolution of this sort unless the Chancellor is present. Let me show the House why. This is the very widest Resolution that I have ever seen upon the Order Paper of this House. Under the words of paragraph (a) if any hon. Member had, 20 years ago, sold a house, and that house had been bought by the Bank of England, then upon the death of that hon. Member his estate could be valued at either the assets of the Bank of England or a proportionate part of the assets of the Bank of England. That case is covered by this
Resolution—[Interruption.] There is no doubt about it. To ask us to pass such a Resolution without an explanation is an outrage upon the House. We are not doing our duty, and the Chancellor of the Exchequer is not doing his duty. I have no sympathy for those who by unlawful means deprive the Exchequer of Estate Duty which ought to go to the Exchequer, but it is a totally different matter when a Resolution such as this is put upon the Order Paper. Subject to the conditions of the Finance Bill, it would render anyone who during his lifetime had sold any property, whether through the Stock Exchange or at the auction mart, and that property had been bought by any company, either in this country or anywhere in the world, subject to the risk of Death Duties out of all proportion to the estate which he actually possessed.
I do not want that man to escape the Death Duties, but I want him to be protected against an absurdly wide Clause which would land him into Death Duties
far beyond anything which he would be obliged to pay under the law as it stands. We are asked to pass a Resolution which has the effect I have stated, and I am quite sure that, whoever replies on behalf of the Government, cannot say that I have exaggerated the case in the least degree, because this Resolution would cover the case which I have mentioned. I cannot believe that the Government mean to do that. It is not enough to say that this Resolution is to be
subject to such exceptions and qualifications as Parliament may by any Act of the present Session relating to Finance determine.
It is not sufficient to say that we should wait to see what the Finance Act will give us, and we ought to have a statement at once as to the intentions of the Government, and why they are asking us to pass this Resolution. The Government ought to say quite definitely with regard to paragraph (a) what they are proposing to do. I will not deal now with paragraphs (b), (c) and (d). If we cannot have the information for which I have asked definitely stated, the Government should be able to tell us in informal language, and I hope the Chancellor of the Exchequer will be present to give the House this information. I have taken steps to have the Chancellor of the Exchequer informed that I was going to ask this question, and I am surprised that he is not present to answer it. The Government are not meeting the House in a proper way on this matter, and if they want these Resolutions passed quickly they should at least play their part.

Dr. BURGIN: There are certain features about this Resolution which it is quite impossible to pass without challenge. The right hon. Gentleman the Member for St. George's (Sir L. Worthington-Evans) has properly called attention to the fact that the word "property" has no reference to landed estates, and includes all estate. The right hon. Gentleman has also called attention to the fact that the word "company" appears to mean any corporation, British or foreign, imperial or otherwise. I think it is necessary that hon. Members should look a little more closely at what this Resolution is intended to cover, for it seems to strike not only at the future but at the past with-
out any limit of time. We are all agreed that sanctity of contract is a very desirable idea, and legislation of a retrospective character must always be locked at more closely than any other kind of legislation. Unless the Finance Bill when passed contains exceptional qualifications to render the wide language of this Resolution less illusory, there will be introduced an enormous amount of hazard into the ordinary affairs of the men and women of this country. Paragraph (a) provides that:
if a deceased person has in his lifetime directly or indirectly transferred property to a company and has in his lifetime received, directly or indirectly, benefits of any kind (other than interest or dividends) from that company,"—
That means that any person who at any distance of time has transferred property and has enjoyed benefits of any kind, and had it been limited to that I could understand it, but when it comes to the transfer of any property of any company by any body at any time it is difficult to understand words of that width. I do not understand the meaning of the words:
a sum representing the assets of that company at the date of his death, or a proper proportion of those assets.
A proportion is only one factor in the arithmetical sum unless you say what the proportion is to be. Is it to be proportionate to the period of time or the enjoyment or both? I quite appreciate that the moment for discussing this question in detail will be when the Finance Bill is before us, but I think it is only right that when a Resolution of this kind is put before the House we should enter a caveat each time it comes before us. It is solely with that object in view that I am making these observations.
I wish the Financial Secretary to understand that if a landowner were to transfer his property to a company and arrange that practically every shareholder should himself be a company, quite obviously there would be a state of things which would require to be checked. There is an increasing tendency to transfer property in order to avoid Death Duties, but it is a different thing to transfer landed estates to a one-man company to avoid Death Duties, and to interfere with business arrangements which were made 20 years ago. I do not propose to discuss paragraph (b) which is consequential, but I ask hon. Members
to look at paragraphs (c) and (d). In paragraph (c) the value of the shares is to be calculated in some measure by valuing the total assets of the company. There may be no criticism of that proposal, but in paragraph (d) it is stated that the Estate Duty payable under the terms of this Resolution shall be a debt due to the Crown from the company, and that every director of that company shall be accountable to the Crown for the duty. I have no doubt that this is intentional, but the width of the responsibility placed upon those who innocently become members of a board of management of a company, in the event of somebody ever having transferred property to it, is really one which ought to be brought to their attention. In the case of a Resolution of this kind, capable of having such very wide meaning, unless there is some assurance that the Finance Bill will contain exceptions and qualifications which will make provision for genuine examples such as those which have been cited, there is a rather a serious matter involved which the House ought to take time to consider.

Sir D. HERBERT: I should like for one moment to reinforce what the right hon. Member for St. George's (Sir L. Worthington-Evans) has said, and to carry the matter a little bit further than he did. I want to make my protest as I did on the 9th Resolution. Personally I do not think the House ought to be satisfied, as a general rule, with the mere statement from the Front Government Bench as to what their intentions are within the limits of these Resolutions. I am glad that the President of the Board of Trade is here, because I think he will sympathise very much with what is in my mind. This House is practically abdicating those privileges and powers, which it possesses by reason of Financial Resolutions, if it takes to passing a Financial Resolution of such ridiculous width, thereby making the safeguard of a Financial Resolution practically worthless. My hon. Friend who spoke last said he had not any particular quarrel with the last words of Paragraph (c). I want to quote them as being a very remarkable and extraordinary provision, giving positively ridiculous width and extent to powers which the Government are pro-
posing to take in the Resolution. It says that shares passing on the death of a person are to be valued
by reference to the principal value of the total assets of the company.
"Reference to the principal value" apparently means basing it upon the value, and I assume that "total assets of the company" means the total assets and not the excess of the company's assets over liabilities. I will give the right hon. Gentleman a case which I know of as an actual fact. It is the case of a man who, if he were to die to-morrow, would die possessed of an estate which, if it were valued as the law now stands, would be worth about £10,000. Half the value of that estate would be represented by a holding in one particular company, which I know of and particulars of which I could give to the right hon. Gentleman. The other £5,000 would be represented by odd assets of various kinds, including furniture, bank balance and trifling investments. The shares are worth £5,000, and not one penny more according to their intrinsic value on the strictest valuation, and that is above the value at which they are quoted on a free market in the Stock Exchange at the present moment. If the shares were valued by reference to the total assets of the company, instead of being worth £5,000 they would be worth £70,000. The Chancellor of the Exchequer, under this Resolution, is therefore taking power, where people hold shares in a particular type of company, to impose a liability for Death Duties on the estate of a person who dies, of far more than the total value of the whole of his estate.
I know the Chancellor of the Exchequer and the other Members of the Government too well to credit them with the intention to do anything so ridiculous as that, but what they are doing is this: They are making the most valued and valuable form of financial procedure in this House a ridiculous farce. I hope, and indeed feel quite sure, that the President of the Board of Trade will feel there is something in this, and that care ought to be taken by those who advise the Ministers in this matter to see that the House is not insulted by having submitted to it a Financial Resolution of such width and extent that the Government might have
the power within the Resolution to do things which no House of Commons would ever allow them to do.

Mr. PETHICK-LAWRENCE: I think the right hon. Gentleman who raised this point from the Front Bench opposite, and the other two hon. Gentlemen, are perfectly entitled to put the point which they have put to me on this particular question, but I do not think the Government is to be blamed in bringing this Resolution forward in the particular way they have done. This Resolution is to cover cases of evasion. The House knows perfectly well the kind of case of evasion with which we have to deal. There have been cases in recent years in which persons with property—not necessarily landed property—have turned themselves into a company, and through various provisions which they have made they have enabled their estates very largely to escape the Death Duties to which they would otherwise be liable. This has gone on in various forms with which those who have studied the matter are fully acquainted. It is perfectly true—and nobody will deny—that the actual form that these Resolutions take is very much wider than the legislation which is going to be proposed, or ought to be proposed, in order to deal with these cases of evasion. The hon. Member who dealt with this point said that he thought it was an abuse of the Rules of the House and rendered of no effect the methods which this House adopts, of first carrying through these Financial Resolutions and then proceeding by way of a Bill. I do not take that view at all. The introduction of this Resolution, carrying it through first in Committee and then afterwards on Report, gives the House full warning that legislation of a certain kind is being promoted.

Sir L. WORTHINGTON-EVANS: What kind?

Mr. PETHICK-LAWRENCE: It indicates the general lines of the Resolution, and the House will become then fully cognisant of the fact that in order not to put oppressive restrictions—[Interruption.] I have listened with great attention to what the right hon. Gentleman opposite said, and I hope that when I am making the reply for which hon. Gentlemen have asked they will do me the courtesy of giving me their attention.
I was trying to explain that so far from being of no effect, these Resolutions give the House due warning that these matters are going to be reviewed and dealt with by a Bill. This is undoubtedly a very complicated question. When it comes to the Finance Bill certain complicated Clauses will have to be inserted and very careful limitations made.
It would be very much overweighting the Financial Resolutions if they contained all the detailed complications which it is necessary to put into the Finance Bill. The House does not lose its control by what has been done. It will have an opportunity of seeing the Finance Bill very soon after these Resolutions have been carried. It will have an opportunity of weighing them up before the Second Reading of the Finance Bill. It will have an opportunity of discussing the Clauses on the Second Reading, and it will have an opportunity in Committee, on Report and on Third Reading. There will be four stages beyond that which we are taking at the present time, in which the details will be considered. I believe it is the practice of the House, and it is better, not to burden these Resolutions with the limitations which come afterwards in the Bill. It is true that these are wide provisions, but they will be more detailed in the Bill.
Let me explain briefly what it is that the proposals do. It is proposed to deal with the case of the man who hands over his own property to a company for the deliberate purpose of evading Death Duties. For that purpose it is necessary to go behind the technical forms of the transaction to the practical effect of the transaction, and if it be found, as it undoubtedly is found in a great many cases, that although technically and nominally he has disposed of his property to the company, in spite of that technical and nominal transaction he has exactly the same power over the income as he would have had it remained in his sole possession, that really is a case in which an attempt is being made to evade the law. It is in those cases that we propose to step in to vindicate the law and to obtain the Estate Duties which it is the intention of both sides of the House should be paid in such a case. The first para-
graph deals with property in the sole possession of the person who makes the transaction.

Sir L. WORTHINGTON-EVANS: Is that the only case dealt with in the first paragraph?

Mr. PETHICK-LAWRENCE: Yes. It is where a man hands over his property to the company. The second case is where he proposes to do something of the same kind with his settled property, and the object is to prevent him from disposing of his settled property in a way similar to the first case, and avoiding payment of Estate Duties. With regard to the third case, it is not the intention to bring into dispute all companies whose shares are being freely sold in the open market, but the House is well aware of the fact that there are a large number of companies whose shares are not dealt with on the Stock Exchange but pass from one to two or three people in a market which is very closely confined and by sales, possibly in some cases designed for the express purpose, at an entirely fictitious value. Everyone who has had any dealings with companies which are companies of few people, know that that takes place. In that way when the property of one member of the company, shares in the company, come in at the death of that member, an entirely erroneous value is put on his holding in the company. It is proposed in paragraph (c) that in such case the revenue authorities shall not be bound by the share value which appears to be disclosed by what I will not say are bogus sales, but sales at fictitious values between the two or three people who are shareholders in the company.

Sir D. HERBERT: Is it not the case already that in regard to shares where there is no market in the ordinary sense of the term, the Inland Revenue authorities can and do insist upon valuing the shares according to the Inland Revenue's own valuation of the assets owned by the company and, on the other hand, of its liabilities. In what respect, therefore, is it proposed to alter the law further at the present time?

Mr. PETHICK-LAWRENCE: I will look into that matter.

Mr. REID: What my hon. Friend the Member for Watford (Sir D. Herbert)
has said is a fact at the present time. It is all very well for the Financial Secretary to say that he will have to look into the matter, but we want to know before we pass this Resolution, which is so wide.

Mr. PETHICK-LAWRENCE: We will look into the matter and I hope that later in this Debate either I or my right hon. Friend the President of the Board of Trade will say to what extent, if at all, the present position is inadequate to deal with the matter and why steps are necessary in such case for strengthening it by paragraph (c).

Sir L. WORTHINGTON-EVANS: My hon. Friend called attention to the fact that the words "total assets" appear here and not "total net assets," and that the valuation might take place irrespective of the liabilities of the company.

Mr. PETHICK-LAWRENCE: I had not noticed that particular point, but I am sure that it will be dealt with. There is no intention to depart from a reasonable interpretation of what are the assets of the company.

Sir L. WORTHINGTON-EVANS: Net assets are meant.

Mr. PETHICK-LAWRENCE: I have no doubt that is the case. The hon. Member for Luton (Dr. Burgin) said that it is quite improper that a company should become liable, or the directors of the company, but if my hon. Friend will consider the matter he will see that in the cases to which I am referring, the cases of deliberate evasion, through handing over the whole of a man's property to a company, there is no other way of proceeding. Suppose I turned over the whole of my estate to a company, with one set of directors. By doing that, I practically leave no estate of my own and I leave my estate in the hands of the directors of the company. In such a case, unless we insert paragraph (d), how would it be possible for my executors to pay the duty out of the very trivial part of my estate that remained?

Sir D. HERBERT: Why the directors personally?

Mr. PETHICK-LAWRENCE: Someone must be made responsible. The individual who has made the transaction is dead and the remaining directors must
be the people who, having the property in the company, are able to handle it. Of course I do not pretend to be able to give the House all the details which will appear in the Finance Bill. I think, however, that I have given to hon. Members a general outline of what the intention is and what it is proposed to do in the Finance Bill. These paragraphs of the Resolution cover our intention. I agree that they are a good deal wider than they ought to be, if it were intended to embody them in their existing form in the Bill. I still maintain, however, that it is less cumbersome to put them in this form and then, when it comes to the Finance Bill, to limit them to the cases that ought to be dealt with, than it would be to give in this Resolution the whole thing—to give the scope, the limitations, and the reservations and all that otherwise would be required. I hope that I shall find agreement in the House on this matter.

Dr. BURGIN: Will the Financial Secretary allow me to put this one question? Is it proposed that these suggestions in the new Finance Bill should deal with assignments to companies prior to the 14th April, 1930? It seems to me to be of the greatest possible consequence whether this is intended to be for the future only or to strike backwards.

Mr. REID: Will the Financial Secretary deal also with this matter? He has given as his justification for levying this tax on companies the fact that the property has passed to them, but I would point out to him that the property does not pass for nothing. It passes in return for capital or shares, and are the companies therefore to be mulcted in this respect?

Mr. PETHICK-LAWRENCE: There are three points which I have to answer. In the first place as to special valuation of shares at the present time. I will answer that now. I think there have been occasions when it has been done, but in order that it may be regularised it is necessary to have this paragraph (c) in the Resolution. With regard to the point advanced from the Liberal benches, this does apply to cases where deliberate evasion has been attempted by action that has taken place in the past. I do not think, however, that this can possibly be termed retrospective. It would only
be retrospective had it been proposed to go back and deal with the estates of people who had died in the past. This is not retrospective, because it applies to people who will die in the future, and with regard to those it is surely right to say that where it is shown that they have taken steps deliberately to evade the law, they should be brought within the terms proposed in this paragraph. It is perfectly possible and perfectly right to adopt this attitude just as it would be to alter the number of years in which the rule as to gifts inter vivos operates. It would apply to all those people who died after the particular Finance Act came into operation. That would not be retrospective legislation. Where people have so dealt with their property that when they come to die they will evade the Act, we must provide that they will not escape the tax.

Dr. BURGIN: If it is limited to evasion there is nothing more to be said.

Mr. PETHICK-LAWRENCE: It is intended solely to deal with evasion. Then the hon. Member for Down (Mr. Reid) raised a point which I cannot quite bear in my mind. Would the hon. Gentleman mind repeating his question?

Mr. REID: My point was that the hon. Gentleman gave as his justification for levying this tax on companies the fact that the property had passed to them. But the property does not pass to companies for nothing. It passes in return for capital or shares, and therefore I would ask him if the companies are to be mulcted in this respect.

Mr. PETHICK-LAWRENCE: The hon. Member is thinking of legitimate transactions. The object of these proposals is to get at illegitimate transactions. The hon. Member evidently has had to deal with people who have been honest. In illegitimate transactions of this kind—

Mr. REID: Who is to judge between legitimate and illegitimate?

Mr. PETHICK-LAWRENCE: That is not the point at issue at present. The point is that, in illegitimate transactions, though the ownership of the property passes from the man to the company, yet nevertheless he does not receive shares in the ordinary sense; such shares as he receives are so constructed that he may
get the benefit during his life, and yet there is no share passing at death. When the hon. Member asks who is going to judge, I would point out to him that in the Finance Bill there will be the precise terms and reservations, and if they are not satisfactory hon. Members will have three or four opportunities of dealing with them.

Mr. REID: Will it be a Judge of the High Court?

Mr. PETHICK-LAWRENCE: I cannot go further in the matter by setting out in detail exactly what is in the Finance Bill, but hon. Members will have plenty of time to see. I think I have dealt with this matter adequately, and I do suggest that the attitude we have taken up is the correct one. Hon. Members may think otherwise, but I have stated what I believe to be the case. I would like to finish as I began, by saying that we may differ on the precise terms that should be imposed in this matter; we may differ as to whether it is desirable that these Financial Resolutions should be drawn quite so widely, but I believe that there is very little difference of opinion in any section of the House that where deliberate evasion is practised—as it is undoubtedly practised in the cases to which I have referred, it ought to be stopped, not only in the interests of the State and the revenue, but in the interests of those taxpayers who are not dishonest and do not defraud the revenue. The House will have its own opportunity of saying whether the Government are attempting to go beyond what is necessary in order to stop evasion.

Major COLFOX: What does the Financial Secretary mean by "illegitimate transactions"? "Illegitimate" means unlawful, but these transactions in the past have not been unlawful, and it is only the Finance Bill, when it becomes an Act, which will make them unlawful.

Mr. PETHICK-LAWRENCE: What I intended to convey was that these were practices which, if not at the time actually prohibited by the law, were generally recognised by right-thinking people to be thoroughly unsatisfactory and improper for citizens of this country.

Mr. SMITHERS: I wish to make one specific point on this Resolution and the policy behind it. The hon. Gentleman
has spoken of evasion. I have worked in the City since I was a boy, and if any practical technical knowledge which is at my disposal is useful to the hon. Gentleman to prevent evasion, it is there all the time. I am out to help any Government which will try to make people pay their just taxes. Having said that, I wish to call attention to the dreadful reply which we have had from the Financial Secretary. I do not wish to say anything harsh but he is a pure theorist in finance and his speech to-night is based solely on theory and not on practical knowledge. He talks about the width of these Resolutions. I am concerned as a citizen to try to help to keen up the country's credit and when the investors of this country see these Resolutions, they will not know of any technical meaning behind them. They will not know that the Resolutions have been drawn widely so as to be embodied in the Finance Bill; and I can assure the hon. Gentleman that, during the last week, there have been more real fears, more loss of confidence, owing to the behaviour of this Government than I have ever known in the City and I have been there since I was 19. It is this kind of amateur dealing with finance which is doing real harm and I want to make my humble protest against it.

10.0 p.m.

Mr. STUART BEVAN: The hon. Gentleman said that this Resolution was directed against illegitimate transactions. What is meant by "illegitimate transactions" in this connection I am not quite sure, but I assume that the hon. Gentleman means transactions which he hopes in future to stop by means of this Resolution, perfectly legitimate though they may be to-day. The construction of this Resolution is a little difficult to follow, but it may be that paragraphs (a) and (b) of the Resolution are directed at such transactions as have been indicated. When we come to paragraph (c) however, we find that it deals with a much wider class of transactions, including the acquisition of shares by any taxpayer in any public company in the country. Apart from the question of what may hereafter be illegitimate transactions, paragraph (c) clearly applies to a perfectly lawful transaction which is altogether outside the scope of paragraphs (a) and (b), namely, the acquisition of
small parcels of shares in a public company. It provides that the value of those shares or interests shall be determined—not "may" be determined—not by the market price of the shares in the public company, the price at which they are changing hands every day, but "by reference to the principal value of the total assets of the company."
That is a monstrous condition, and it has no relation to the class of transaction which the Chancellor of the Exchequer desires to stop and with regard

to which I think he may rest assured that there is sympathy with him on both sides of the House. This paragraph goes outside that class of transactions; it inflicts an intolerable hardship, and induces a state of uncertainty in the mind of every holder of shares, whether of a large block or a modest block of shares, in any public company.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided; Ayes, 245; Noes, 115.

Division No. 275,]
AYES.
[10.2 p.m.


Adamson, Rt. Hon. W. (Fife, West]
Forgan, Dr. Robert
Lee, Jennie (Lanark, Northern)


Adamson, W. M. (Staff., Cannock)
Freeman, Peter
Lees, J.


Addison, Rt. Hon. Dr. Christopher
Gardner, B. W. (West Ham, Upton)
Lewis, T. (Southampton)


Aitchison, Rt. Hon. Cralgie M.
George, Megan Lloyd (Anglesea)
Lindley, Fred W.


Alexander, Rt. Hon. A. V. (Hilltbro')
Gibbins, Joseph
Lloyd, C. Ellis


Alpass, J. H.
Gibson, H. M. (Lancs. Mossley)
Logan, David Gilbert


Ammon, Charles George
Gill, T. H.
Longbottom, A. W.


Arnott, John
Gillett, George M.
Longden, F.


Aske, Sir Robert
Gossling, A. G.
Lovat-Fraser, J. A.


Ayles, Walter
Gould, F.
Lunn, William


Baker, John (Wolverhampton, Bilston)
Graham, D. M. (Lanark, Hamilton)
Macdonald, Gordon (Ince)


Baldwin, Oliver (Dudley)
Graham, Rt. Hon. Wm. (Edin., Cent.)
MacDonald, Rt. Hon. J. R.(Seaham)


Barnes, Alfred John
Gray, Milner
Mackinder, W.


Barr, James
Greenwood, Rt. Hon. A. (Colne)
McKinlay, A.


Batey, Joseph
Grenfell, D. R. (Glamorgan)
Maclean, Neil (Glasgow, Govan)


Bellamy, Albert
Griffith, F. Kingsley (Middlesbro' W.)
Macpherson, Rt. Hon. James I.


Benn, Rt. Hon. Wedgwood
Griffiths, T. (Monmouth, Pontypool)
Malone, C. L'Estrange (N'thampton)


Bennett, Captain E. N.(Cardiff, Central)
Grundy, Thomas W.
Mander, Geoffrey le M.


Benson, G.
Hall, F. (York, W. R., Normanton)
Mansfield, W.


Bentham, Dr. Ethel
Hall, G. H. (Merthyr Tydvil)
Markham, S, F.


Bevan, Aneurin (Ebbw Vale)
Hall, Capt. W. P. (Portsmouth, C.)
Marley, J.


Birkett, W. Norman
Hamilton, Mary Agnes (Blackburn)
Marshall, Fred


Blindell, James
Hamilton, Sir R. (Orkney & Zetland)
Mathers, George


Bowerman, Rt. Hon. Charles W.
Harbord, A.
Matters, L. W.


Broad, Francis Alfred
Hardle, George D.
Messer, Fred


Brockway, A. Fenner
Hastings, Dr. Somerville
Miller, J. D.


Bromley, J.
Haycock, A. W.
Mills, J. E.


Brooke, W.
Hayday, Arthur
Milner, Major J.


Brothers, M.
Hayes, John Henry
Montague, Frederick


Brown, C. W. E. (Notts. Mansfield)
Henderson, Right Hon. A. (Burnley)
Morley, Ralph


Brown, Rt. Hon. J. (South Ayrshire)
Henderson, Arthur, Junr. (Cardiff, S.)
Morris, Rhys Hopkins


Burgin, Dr. E. L.
Henderson, Thomas (Glasgow)
Morris-Jones, Dr. J. H. (Denbigh)


Buxton, C. R. (Yorks. W. R. Elland)
Henderson, W. W. (Middx., Enfield)
Morrison, Herbert (Hackney, South)


Calne, Derwent Hall-
Herriotts, J.
Mort, D. L.


Cameron, A. G.
Hirst, G. H. (York, W. R., Wentworth)
Moses, J. J. H.


Carter, W. (St. Pancras, S. W.)
Hoffman, P. C.
Mosley, Lady C. (Stoke-on-Trent)


Charleton, H. C.
Hollins, A.
Muff, G.


Chater, Daniel
Hopkin, Daniel
Muggeridge, H. T.


Church, Major A. G.
Hudson, James H. (Huddersfield)
Murnin, Hugh


Clarke, J. S.
Hunter, Dr. Joseph
Naylor, T. E.


Cluse, W. S.
Isaacs, George
Newman, Sir R. H. S. D. L. (Exeter)


Clynes, Rt. Hon. John R.
Jenkins, W. (Glamorgan, Neath)
Oliver, George Harold (Ilkeston)


Cocks, Frederick Seymour
John, William (Rhondda, West)
Oliver, P. M. (Man., Blackley)


Compton, Joseph
Johnston, Thomas
Owen, Major G, (Carnarvon)


Cowan, D. M.
Jones, F. Liewellyn- (Flint)
Owen, H. F. (Hereford)


Daggar, George
Jones, Henry Haydn (Merioneth)
Palin, John Henry


Dallas, George
Jones, J. J. (West Ham, Silvertown)
Palmer, E. T,


Dalton, Hugh
Jones, Morgan (Caerphilly)
Parkinson, John Allen (Wigan)


Davies, Rhys John (Westhoughton)
Jowett, Rt. Hon. F. W.
Perry, S. F.


Denman, Hon. R. D.
Jowitt, Rt. Hon. Sir W. A.
Pethick-Lawrence, F. W.


Dickson, T.
Kennedy, Thomas
Phillips, Dr. Marion


Dudgeon, Major C. R.
Kinley, J.
Picton-Turbervill, Edith


Dukes, C.
Knight, Holford
Pole, Major D. G.


Duncan, Charles
Lang, Gordon
Potts, John S.


Ede, James Chuter
Lansbury, Rt. Hon. George
Price, M. P.


Edge, Sir William
Lathan, G.
Pybus, Percy John


Edmunds, J. E.
Lawrence, Susan
Quibell, D. J. K.


Edwards, C. (Monmouth, Bedwellty)
Lawson, John James
Ramsay, T. B. Wilson


Edwards, E. (Morpeth)
Lawther, W. (Barnard Castle)
Raynes, W. R.


Egan, W. H.
Leach, W.
Richardson, R. (Houghton-le-Spring)


Elmley, Viscount
Lee, Frank (Derby. N. E.)
Riley, Ben (Dewsbury)


Riley, F. F. (Stockton-on-Tees)
Smith, Ben (Bermondsey, Rotherhithe)
Viant, S. P.


Ritson, J.
Smith, Frank (Nuneaton)
Walkden, A. G.


Roberts, Rt. Hon. F. O. (W. Bromwich)
Smith, Rennie (Penistone)
Walker, J.


Romeril, H. G.
Smith, Tom (Pontetract)
Watkins, F. C.


Rosbotham, D, S. T.
Smith, W. R. (Norwich)
Watson, W. M. (Dunfermline)


Rowson, Guy
Snell, Harry
Watts-Morgan, Lt.-Col. D. (Rhondda)


Russell, Richard John (Eddisbury)
Snowden, Rt. Hon. Philip
Wellock, Wilfred


Salter, Dr. Alfred
Snowden, Thomas (Accrington)
Welsh, James (Palsley)


Samuel, Rt. Hon. Sir H. (Darwen)
Sorensen, R.
Welsh, James C. (Coatbridge)


Sanders, W. S.
Stamford, Thomas W.
Westwood, Joseph


Sandham, E.
Strachey, E. J. St. Loe
Whiteley, Wilfrid (Birm., Ladywood)


Scrymgeour, E.
Strauss, G. R.
Williams, David (Swansea, East)


Scurr, John
Sullivan, J.
Williams, T. (York, Don Valley)


Shepherd, Arthur Lewis
Sutton, J. E.
Wilson, C. H. (Sheffield, Attercliffe)


Shield, George William
Taylor, W. B. (Norfolk, S. W.)
Wilson, J. (Oldham)


Shiels, Dr. Drummond
Thomas, Rt. Hon. J. H. (Derby)
Wilson, R. J. (Jarrow)


Shinwell, E.
Thurtle, Ernest
Wise, E. F.


Short, Alfred (Wednesbury)
Tinker, John Joseph
Young, R. S. (Islington, North)


Simmons, C. J.
Toole, Joseph



Sinclair, Sir A. (Caithness)
Tout, W. J.
TELLERS FOR THE AYES.—


Sinklnson, George
Turner, B.
Mr. William Whiteley and Mr.


Smith, Alfred (Sunderland)
Vaughan, D. J.
Paling.


NOES.


Acland-Troyte, Lieut-Colonel
Ganzonl, Sir John
Peto, Sir Basil E. (Devon, Barnstaple)


Albery, Irving James
Gault, Lieut.-Col. Andrew Hamilton
Power, Sir John Cecil


Allen, Sir J. Sandeman (Liverp'l., W.)
Gilmour, Lt.-Col. Rt. Hon. Sir John
Pownall, Sir Assheton


Atholl, Duchess of
Gower, Sir Robert
Ramsbotham, H.


Atkinson, C.
Graham, Fergus (Cumberland, N.)
Rawson, Sir Cooper


Balfour, George (Hampstead)
Grattan-Doyle, Sir N.
Reid, David D. (County Down)


Balfour, Captain H. H. (I. of Thanet)
Greene, W. P. Crawford
Remer, John R.


Beamish, Rear-Admiral T. P. H.
Grenfell, Edward C. (City of London)
Rentoul, Sir Gervals S.


Betterton, Sir Henry B.
Guinness, Rt. Hon. Walter E.
Roberts, Sir Samuel (Ecclesall)


Bevan, S. J. (Holborn)
Gunston, Captain D. W.
Ruggles-Brise, Lieut.-Colonel E. A.


Birchall, Major Sir John Dearman
Hamilton, Sir George (Ilford)
Salmon, Major I.


Bourne, Captain Robert Croft
Hanbury, C.
Samuel, A. M. (Surrey, Farnham)


Bowyer, Captain Sir George E. W.
Henderson, Capt. R. R. (Oxf'd, Henley)
Samuel, Samuel (W'dsworth, Putney)


Brass, Captain Sir William
Heneage, Lieut.-Colonel Arthur P.
Sandeman, Sir N. Stewart


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hannessy, Major Sir G. R. J.
Skelton, A. N.


Carver, Major W. H.
Herbert, Sir Dennis (Hertford)
Smith, Louis W. (Shelfield Hallam)


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Hills, Major Rt. Hon. John Waller
Smith-Carington, Neville W.


Chadwick, Sir Robert Burton
Howard-Bury, Colonel C. K.
Smithers, Waldron


Christie, J. A.
Hudson, Capt. A. U. M. (Hackney, N.)
Somerville, D. G. (Willesden, East)


Colfox, Major William Philip
Hunter-Weston, Lt.-Gen. Sir Aylmer
Southby, Commander A. R. J.


Colville, Major D. J.
Hurd, Percy A.
Stanley, Maj. Hon. O. (W'morland)


Cranborne, Viscount
Iveagh, Countess of
Steel-Maitland, Rt. Hon. Sir Arthur


Croft, Brigadier-General Sir H.
Kindersley, Major G. M.
Stuart, Hon. J. (Moray and Nairn)


Crookshank, Capt. H. C.
Knox, Sir Alfred
Tinne, J. A.


Croom-Johnson, R. P.
Lamb, Sir J. Q.
Titchfield, Major the Marquess of


Culverwell, C. T. (Bristol, West)
Law, Sir Alfred (Derby, High Peak)
Train, J.


Dalrymple-White, Lt.-Col. Sir Godfrey
Leighton, Major B. E. P.
Tryon, Rt. Hon. George Clement


Davies, Dr. Vernon
Liewellin, Major J. J.
Wallace, Capt. D. E. (Hornsey)


Davies, Maj. Geo. F.(Somerset, Yeovil)
McConnell, Sir Joseph
Ward, Lieut.-Col. Sir A. Lambert


Dlxey, A. C.
MacRobert, Rt. Hon. Alexander M.
Waterhouse, Captain Charles


Duckworth, G. A. V.
Maitland, A. (Kent, Faversham)
Wells, Sydney R.


Edmondson, Major A. J.
Meller, R. J.
Williams, Charles (Devon, Torquay)


Elliot, Major Walter E.
Merriman, Sir F. Boyd
Windsor-Clive, Lieut.-Colonel George


England, Colonel A.
Morrison, W. S. (Glos., Cirencester)
Womersley, W. J.


Erskine, Lord (Somerset, Weston-s. M.)
Morrison-Bell, Sir Arthur Clive
Worthington-Evans, Rt. Hon. Sir L.


Everard, W. Lindsay
Muirhead, A. J.



Fermoy, Lord
Newton, Sir D. G. C. (Cambridge)
TELLERS FOR THE NOES.—


Flson, F. G. Clavering
Oman, Sir Charles William C.
Sir Frederick Thomson and Sir


Ford, Sir P. J.
O'Neill, Sir H.
George Penny.


Galbraith, J. F. W.
Peaks, Captain Osbert



Question put, and agreed to.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. SMITHERS: I want to raise a technical point on this Resolution. The House will remember that early in the day the question of the main Act of 1918 was not mentioned in the Resolution as
amended by subsequent Acts, The question was raised whether that was in order, and you gave a Ruling on the matter. In this Resolution there has been put in a reference to the Finance Act of 1896 and the Acts amending it. I want to know why, if it is necessary to put the amending Acts in this Resolution, it was not necessary in the Resolution on insurance policies, and whether that will affect the provisions of the Finance Bill.

Mr. CHARLES WILLIAMS: I should like to ask a question on this particular Resolution. [Interruption.] I have not taken any part in the Debate to-day, and I have the same right as every other Member to look after the interests of constituents and of the country as a whole and I intend to do so. I should like to ask what is the reason of this Resolution. I understand that it is dealing with objects of art. I wish to ask the Chancellor of the Exchequer precisely what he means by the definition which he uses in this Resolution. I realise that there are already certain technicalities by which the Government are able to prescribe objects of art in these cases. We have been told that these Resolutions are an attempt on behalf of the Government to explain what they are going to do in the future, and I think we might be told why it is necessary to alter the law on this matter, and how far it is desired that the law shall be altered—whether it is to be extended so that a larger proportion of objects of art of national interest will be included, or whether there is no intention of that kind.

Mr. PETHICK-LAWRENCE: The point is a very simple one. Hitherto works of art have been valued at at the time of death, but have not become chargeable to duty unless and until they were sold. Considerable disadvantage has resulted from that, especially to persons who inherited particular objects of art, because, however much secrecy was intended, it was disadvantageous, when there was any question of sale, that this valuation should have been made. It is now proposed that these articles shall not be valued at the time of death, but that, if and when they are sold, then for the first time they shall be valued; that Estate Duty shall be paid on them then; and that for purposes of aggregation they shall not be included in the estate at all, but that the rate of duty shall be the aggregate of the rest of the property with the objects of art left out. The other point is a minor one. I thought I had explained earlier in the day that it was sufficient to state the Act, which covered amending Acts, but sometimes, for the sake of convenience, these are stated also.

Mr. A. M. SAMUEL: Will the value be the price realised on sale?

Mr. PETHICK-LAWRENCE: Yes.

Orders of the Day — REPORT [16TH APRIL].

AMENDMENT OF LAW.

Resolution reported,
That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance.

TRANSFER OF SUMS FROM RATING RELIEF SUSPENCE ACCOUNT TO EXCHEQUER.

Resolution reported,
That there shall be transferred to the Exchequer from the Rating Relief Suspense Account in the current financial year the sum of sixteen million pounds, and in the financial year ending on the thirty-first day of March, nineteen hundred and thirty-two, the balance remaining in the said account.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. C. WILLIAMS: The Chancellor of the Exchequer in the last Parliament said a great many things about this particular matter, and I would like to ask what is the balance of this account. I think that the House ought to have a clear explanation of what the balance is expected to be.

TEMPORARY ADDITIONS TO NEW SINKING FUND.

Resolution reported,
That the following sums shall be charged on and issued out of the Consolidated Fund and applied in the same manner as the New Sinking Fund (1928), that is to say:—
In the financial year ending on the thirty-first day of March, nineteen hundred and thirty-one, the sum of five million pounds;
In the financial year ending on the thirty-first day of March, nineteen hundred and thirty-two, the sum of five million pounds;
In the financial year ending on the thirty-first day of March, nineteen hundred and thirty-three, the sum of four million five hundred thousand pounds.

Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. C. WILLIAMS: As the Chancellor of the Exchequer could not answer the last question, may I try my luck again and see if I can put one that he can answer? I quite realise that he is so overwhelmed with the weight of his Budget and the bad reception it has had throughout the country, that he has quite lost all sense of proportion. May I inquire what is the particular object in these new Sinking Fund figures which we have just had read out, and why they drop from £5,000,000 for the first two years to £24,590,000 in 1933. There quite clearly is a position in regard to these figures which needs some explanation. It is possibly that the right hon. Gentleman is able to make the drop because of some other Estimates which have already passed this evening, though it was not explained to us how it came about, or is the alternative reason that by 1933 he thinks that, thanks to the extraordinary series of good predecessors, except in one case—that was in 1924—we shall then have reduced the interest and the debt will be in such a state that we shall be able to cut down to some extent the commitments which the nation has to make each year for payment of interest and Sinking Fund on the debt.
I apologise for taking up the time of the House on this matter, but it is really of interest to see that the Socialist Chancellor of the Exchequer is taking such an interest in the matter of National Debt, which is one of very great importance. It would be still more important if, at a time when he is considering this matter of National Debt, he would consider something which has a very close alliance with, and that is the national trade and industry in its wider form. The two things hang so closely together that it is possible that these sums of £5,000,000 are really not necessary at present and it is a definite mistake to place these additional burdens year by year on the taxpayers and, unless I have a very clear explanation, I very much doubt if many of us will be able to vote for the Resolution.

Mr. CHURCHILL: I hope that the Chancellor of the Exchequer and the
Government will not take the rapid passage which has been accorded to these closing Resolutions as any indication that we do not dissent very strongly, and for important reasons, to many of them and to some aspects of all of them. There was an arrangement made through the usual channels that if we had an extra day to discuss these Resolutions this week, making a third day, or rather two days and a half in all, certain other Orders were to be entered upon at a reasonable time in the proceedings. These arrangements were made in the ordinary way, and in order to give the fullest effect to them the Conservative Opposition have foregone great opportunities and fertile opportunities of legitimate debate which were clearly open to them. Therefore, I enter this caveat of warning to make it perfectly clear that it must not be assumed that we have, in carrying out, as obviously we should do, the arrangement which we made, in the slightest degree diminished our opposition to many of these proposals, or that our action will invalidate the full criticism which we shall bring to bear upon the proposals in the ample procedure on the Committee stage. This particular Resolution affecting the provisions of the Debt requires to be examined from every point of view, whether it is at this moment a convenient and expedient step to impose further additional onerous direct taxation for the purpose of a comparatively slight addition to our already large Sinking Funds. I do not propose to go into the merits of this argument, but I wish to make it perfectly clear that we reserve to ourselves the fullest rights of examining in every detail the various matters which we have hitherto allowed to pass with practically no debate at all.

Mr. P. SNOWDEN: The right hon. Gentleman has put his case in a way to which no exception can be taken. Of course, there will be other and more ample opportunities of debating the points that have been embodied in the Resolutions under discussion to-day. These Resolutions are simply to give the power to embody Clauses in the Finance Bill, and when they appear in that form they will probably be—at any rate, I hope so—more intelligible to the House of Commons than the phrasing of the Resolutions. But the right hon. Gentleman must not think that I agree with what he said, that the Opposition had
carried out the undertaking. Far from it. There was a very distinct and definite undertaking that we should get through these Resolutions by about half-past Seven. In the statement of business made by the Prime Minister last Thursday he said this:
On Tuesday it is hoped to complete the Report stage of the outstanding Budget Resolutions and of the Resolutions relating to the Finance Bill, which have been agreed in Committee of the Whole House, by about 7.30."—[OFFICIAL REPORT, 1st May, 1930; col. 374, Vol. 238.]

HON. MEMBERS: "It is hoped."

Mr. SNOWDEN: No exception was taken to that, and there has been a definite agreement with the two Whips that we should get these Resolutions by about dinner-time to-day. Now it is 10.30, three hours afterwards, and it was also understood that we should get certain other Orders to-day. There has not been a suspension of the Eleven o'Clock Rule, and therefore the sitting will close at 11 o'clock.

Major ELLIOT: It is exempted business.

Mr. SNOWDEN: Financial Resolutions are, but they have been disposed of.

Major ELLIOT: The Report stage of the Money Resolution on the Housing (Scotland) Bill is exempted.

Mr. SNOWDEN: Yes, that is, but there are about five other Orders which we hoped to get to-day. It must not be understood that I accept the right hon. Gentleman's statement that the Opposition have carried out the terms of the undertaking.

Mr. CHURCHILL: I beg to move, "That the Debate be now adjourned."
I do this to put myself in order, and to take up the charge which has been made by the Chancellor of the Exchequer. I am not prepared in any circumstances to allow a charge of breach of faith in regard to an arrangement or undertaking to pass across the House without it being answered. There may be a misunderstanding—[HON. MEMBERS: "Oh!"] If there is no question of a misunderstanding, we are in the presence of a definite charge of breach of faith. Many of my hon. Friends thought it a great mistake for us to enter into any sort of under-
taking or to have any discussion with the right hon. Gentleman and his friends during the whole course of the Finance Bill. I was personally of opinion, with those with whom I have been discussing this matter, that three days was in accordance with the precedents for Budgets of a similar scope and size as this, and with a view to expediting business, and relieving the House from undue strain, we lent ourselves to an arrangement which was not made through any other channel than through the Parliamentary Secretary to the Treasury and the Chief Opposition Whip. These are the two parties who alone have the right to say whether what has in fact taken place is or is not a fair interpretation of any consultations that they may have had. I have yet to learn that they complain of the course which has been adopted, or that there is any difference between them.

The PARLIAMENTARY SECRETARY to the TREASURY (Mr. T. Kennedy): There is. A very definite arrangement was made on the lines of the statement made by the Prime Minister about business last Thursday. Since then, in order that we might not be accused of straining the meaning of the phrase "about 7.30," I have had conversations with the Chief Opposition Whip, and I agreed with him no later than to-night that the Debate on these Resolutions should end at the very latest by 8.30. I do not think that I am misrepresenting his point of view when I say quite definitely that that hour was regarded as ample time for the Opposition to discuss the Resolutions.

Mr. CHURCHILL: I take this matter extremely seriously, because in all the years that I have sat in this House, it has always been considered essential to the decent conduct of business that any understanding which has been reached should be carried out, even though it may be to the detriment of one or the other of the parties. I naturally have not participated in these discussions, because it would be the greatest mistake for the Chancellor of the Exchequer and anyone sitting on these benches to have conversations across the House in order to arrive at an agreement. I am confident that a misunderstanding is at the root of the difference between the Parliamentary Secretary to the Treasury and the chief Opposition Whip, and on that we have no
information. If it should be found that through a misunderstanding we have been in any way in error it is a matter which we should regret, but, taking the wider view, and in the light of what has now passed it seems to me that we should be well advised for the rest of the proceedings on the Finance Bill to enter into no arrangements. It is perfectly clear that the Chancellor of the Exchequer will utilise any arrangement which has been arrived at, if he possibly can, as the foundation and basis for making offensive charges against his political opponents.

Mr. P. SNOWDEN: The concluding remarks of the right hon. Gentleman were altogether uncalled for and very offensive in their character. He has already admitted in reply to the remarks made by the Chief Government Whip that there must have been an understanding between the Whips—

Mr. CHURCHILL: A misunderstanding.

Mr. SNOWDEN: That there was an understanding between them. The misunderstanding is with the right hon. Gentleman and hon. Members opposite. I take no exception at all to the suggestion that there should be no further arrangements. I pointed out earlier this afternoon that on no occasion, either in the Committee stage of the Resolutions or the Report stage have I asked the House to sit after eleven o'clock at night, and although I have not looked up previous Debates, I am inclined to think that there is no precedent for such an occurrence. I took that course in order to serve the convenience of the Opposition, and as a quid pro quo the arrangement between the two Chief Whips was made. This evening has taught me a lesson, and I entirely agree with the right hon. Gentleman that it would be unwise to make any further bargains.

Mr. C. WILLIAMS: When I rose to address the House after the Chancellor

of the Exchequer had refused to answer a very definite question, which I tried to put as politely as I could, I did so because I remembered the statement the other day to the effect that it was hoped to end about dinner time. [Interruption.] It is perfectly easy for me to go on for some considerable time, but all I wish to do, if hon. Members opposite will allow me, is to conclude my remarks as quickly as possible. As far as I am concerned I hope that in the future arrangements of this kind will be either very clear and very definite, or else, as many of us would welcome, that we may during the remaining stages of the Finance Bill—[HON. MEMBERS: "Divide!"]—have the fullest opportunity of saying what we think on these subjects. [HON. MEMBERS: "Divide!"] Obviously hon. Members opposite know that the Chancellor of the Exchequer has made another mistake. [HON. MEMBERS: "Divide!"] They clearly know that once again—

Mr. SPEAKER: The House would come to a decision sooner if the hon. Member were allowed to make his remarks without so many interruptions.

Mr. WILLIAMS: I have been endeavouring to point out that once again the Chancellor has badly let down his party by trying to score mean and petty points. I deeply regret that on such an occasion as this efforts have been made to divert the attention of the House from a consideration of the financial affairs of the country, on the singularly slim pretext which the Chancellor raised just now. I hope the Motion we are now discussing will be carried to a division, so that we may register our opinion of the behaviour of the Government and the gross discourtesy of the Chancellor himself.

Question put, "That the Debate be now adjourned."

The House divided: Ayes, 103; Noes, 251.

Division No. 276.]
AYES.
[10.44 p.m.


Acland-Troyte, Lieut.-Colonel
Birchall, Major Sir John Dearman
Colfox, Major William Philip


Albery, Irving James
Bourne, Captain Robert Croft
Colman, N. C. D.


Allen, Sir J. Sandeman (Liverp'l., W.)
Bowyer, Captain Sir George E. W.
Colville, Major D. J.


Atholl, Duchess of
Brass, Captain Sir William
Courthope, Colonel Sir G. L.


Atkinson, C.
Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Cranborne, Viscount


Balfour, George (Hampstead)
Carver, Major W. H.
Croft, Brigadier-General Sir H.


Balfour, Captain H. H. (I. of Thanet)
Chadwick, Sir Robert Burton
Crookshank, Capt. H. C.


Beamish, Rear-Admiral T. P. H.
Christie, J. A.
Croom-Johnson, R. P.


Betterton, Sir Henry B.
Churchill, Rt. Hon. Winston Spencer
Culverwell, C. T. (Bristol, West)


Dalrymple-White, Lt.-Col. Sir Godfrey
Iveagh, Countess of
Sandeman, Sir N. Stewart


Davies, Dr. Vernon
King, Commodore Rt. Hon. Henry D.
Skelton, A. N.


Davies, Maj., Geo. F. (Somerset, Yeovil)
Knox, Sir Alfred
Smith, Louis W. (Sheffield, Hallam)


Dlxey, A. C.
Lamb, Sir J. Q.
Smith-Carington, Neville W.


Duckworth, G. A. V.
Law, Sir Alfred (Derby, High Peak)
Smithers, Waldron


Edmondson, Major A. J.
Leighton, Major B. E. P.
Somerville, D. G. (Willesden, East)


Elliot, Major Walter E.
Llewellin, Major J. J.
Southby, Commander A. R. J.


Erskine, Lord (Somerset, Weston-s.-M.)
McConnell, Sir Joseph
Stanley, Maj. Hon. O. (W'morland)


Everard, W. Lindsay
MacRobert, Rt. Hon. Alexander M.
Steel-Maitland, Rt. Hon. Sir Arthur


Fison, F. G. Clavering
Merriman, Sir F. Boyd
Stuart, Hon. J. (Moray and Nairn)


Ford, Sir P. J.
Morrison, W. S. (Glos., Cirencester)
Thomson, Sir F.


Galbraith, J. F. W.
Muirhead, A. J.
Tinne, J. A.


Gilmour, Lt.-Col. Rt. Hon. Sir John
Oman, Sir Charles William C.
Titchfield, Major the Marquess of


Graham, Fergus (Cumberland, N.)
O'Neill, Sir H.
Train, J.


Grattan-Doyle, Sir N.
Peake, Captain Osbert
Tryon, Rt. Hon. George Clement


Greene, W. P. Crawford
Peto, Sir Basil E. (Devon, Barnstaple)
Ward, Lieut.-Col. Sir A. Lambert


Guinness, Rt. Hon. Walter E.
Power, Sir John Cecil
Waterhouse, Captain Charles


Gunston, Captain D. W.
Pownall, Sir Assheton
Wells, Sydney R.


Hamilton, Sir George (Ilford)
Ramsbotham, H.
Williams, Charles (Devon, Torquay)


Hanbury, C.
Rawson, Sir Cooper
Windsor-Clive, Lieut.-Colonel George


Henderson, Capt. R. R. (Oxf'd, Henley)
Remer, John R.
Womersley, W. J.


Heneage, Lieut.-Colonel Arthur P.
Rentoul, Sir Gervals S.
Worthington-Evans, Rt. Hon. Sir L.


Hennessy, Major Sir G. R. J.
Roberts, Sir Samuel (Ecclesall)



Hills, Major Rt. Hon. John Waller
Ruggles-Brise, Lieut.-Colonel E. A.
TELLERS FOR THE AYES.—


Horne, Rt. Hon. Sir Robert S.
Salmon, Major I.
Sir George Penny and Captain


Hunter-Weston, Lt.-Gen. Sir Aylmer
Samuel, A. M. (Surrey, Farnham)
Wallace.


Hurd, Percy A.
Samuel, Samuel (W'dsworth, Putney)



NOES.


Adamson, Rt. Hon. W. (Fife, West)
Dukes, C.
Jowett, Rt. Hon. F. W.


Adamson, W. M. (Staff., Cannock)
Duncan, Charles
Jowitt, Rt. Hon. Sir W. A.


Addison, Rt. Hon. Dr. Christopher
Ede, James Chuter
Kennedy, Thomas


Altchison, Rt. Hon. Craigle M.
Edge, Sir William
Kenworthy, Lt.-Com. Hon. Joseph M.


Alexander, Rt. Hon. A. V. (Hillsbro')
Edmunds, J. E.
Kinley, J.


Alpass, J. H.
Edwards, E. (Morpeth)
Knight, Holford


Ammon, Charles George
Egan, W. H.
Lang, Gordon


Arnott, John
Elmley, Viscount
Lansbury, Rt. Hon. George


Aske, Sir Robert
England, Colonel A.
Lathan, G.


Ayles, Walter
Forgan, Dr. Robert
Law, A. (Rosendale)


Baker, John (Wolverhampton, Bilston)
Freeman, Peter
Lawrence, Susan


Baldwin, Oliver (Dudley)
Gardner, B. W. (West Ham, Upton)
Lawson, John James


Barnes, Alfred John
Gibbins, Joseph
Lawther, W. (Barnard Castle)


Barr, James
Gibson, H. M. (Lancs, Mossley)
Leach, W.


Batey, Joseph
Gill, T. H.
Lee, Frank (Derby, N. E.)


Bellamy, Albert
Gillett, George M.
Lee, Jennie (Lanark, Northern)


Benn, Rt. Hon. Wedgwood
Gossling, A. G.
Lees, J.


Bennett, Capt. E. N. (Cardiff, Central)
Gould, F.
Lewis, T. (Southampton)


Benson, G.
Graham, D. M. (Lanark, Hamilton)
Lindley, Fred W.


Bentham, Dr. Ethel
Graham, Rt. Hon. Wm. (Edin., Cent.)
Lloyd, C. Ellis


Bevan, Aneurin (Ebbw Vale)
Gray, Milner
Logan, David Gilbert


Birkett, W. Norman
Greenwood, Rt. Hon. A. (Colne)
Longbottom, A. W.


Blindell, James
Grenfell, D. R. (Glamorgan)
Longden, F.


Bowerman, Rt. Hon. Charles W.
Griffith, F. Kingsley (Middlesbro' W.)
Lovat-Fraser, J. A.


Broad, Francis Alfred
Griffiths, T. (Monmouth, Pontypool)
Lunn, William


Brockway, A. Fenner
Grundy, Thomas W.
Macdonald, Gordon (Ince)


Bromley, J.
Hall, F. (York, W. R., Normanton)
MacDonald, Rt. Hon. J. R. (Seaham)


Brooke, W.
Hall, G. H. (Merthyr Tydvil)
McElwee, A.


Brothers, M.
Hall, Capt. W. P. (Portsmouth, C.)
Mackinder, W.


Brown, C. W. E. (Notts, Mansfield)
Hamilton, Mary Agnes (Blackburn)
McKinlay, A.


Brown, Rt. Hon. J. (South Ayrshire)
Hamilton, Sir R. (Orkney & Zetland)
Maclean, Neil (Glasgow, Govan)


Buchanan, G.
Harbord, A.
Malone, C. L'Estrange (N'thampton)


Burgess, F. G.
Hardle, George D.
Mander, Geoffrey le M.


Burgin, Dr. E. L.
Hastings, Dr. Somerville
Mansfield, W.


Buxton, C. R. (Yorks, W. R. Elland)
Haycock, A. W.
Markham, S. F.


Caine, Derwent Hall-
Hayday, Arthur
Marley, J.


Cameron, A. G.
Hayes, John Henry
Marshall, Fred


Cape, Thomas
Henderson, Arthur, Junr. (Cardiff, S.)
Mathers, George


Carter, W. (St. Pancras, S. W.)
Henderson, Thomas (Glasgow)
Matters, L. W.


Charleton, H. C.
Henderson, W. W. (Middx., Enfield)
Messer, Fred


Chater, Daniel
Herriotts, J.
Millar, J. D.


Church, Major A. G.
Hirst, G. H. (York W. R. Wentworth)
Mills, J. E.


Clarke, J. S.
Hoffman, P. C.
Milner, Major J.


Cluse, W. S.
Hollins, A.
Montague, Frederick


Clynes, Rt. Hon. John R.
Hopkin, Daniel
Morley, Ralph


Cocks, Frederick Seymour
Hudson, James H. (Huddersfield)
Morris, Rhys Hopkins


Compton, Joseph
Hunter, Dr. Joseph
Morris-Jones, Dr J. H. (Denbigh)


Cowan, D. M.
Isaacs, George
Morrison, Herbert (Hackney, South)


Daggar, George
Jenkins, W. (Glamorgan, Neath)
Mort, D. L.


Dallas, George
John, William (Rhondda, West)
Moses, J. J. H.


Dalton, Hugh
Johnston, Thomas
Mosley, Lady C. (Stoke-on-Trent)


Davies, Rhys John (Westhoughton)
Jones, F. Llewellyn- (Flint)
Muff, G.


Denman, Hon. R. D.
Jones, Henry Haydn (Merioneth)
Muggeridge, H. T.


Dickson, T.
Jones, J. J. (West Ham, Silvertown)
Murnin, Hugh


Dudgeon, Major C. R.
Jones, Morgan (Caerphilly)
Naylor, T. E.




Newman, Sir R. H. S. D. L. (Exeter)
Sanders, W. S.
Taylor, W. B. (Norfolk, S. W.)


Oliver, George Harold (Ilkeston)
Sandham, E.
Thomas, Rt. Hon. J. H. (Derby)


Oliver, P. M. (Man., Blackley)
Sawyer, G. F.
Thurtle, Ernest


Owen, Major G. (Carnarvon)
Scrymgeour, E.
Tinker, John Joseph


Owen, H. F. (Hereford)
Scurr, John
Toole, Joseph


Palin, John Henry
Shepherd, Arthur Lewis
Tout, W. J.


Palmer, E. T.
Sherwood, G. H.
Turner, B.


Parkinson, John Allen (Wigan)
Shield, George William
Vaughan, D. J.


Perry, S. F.
Shiels, Dr. Drummond
Viant, S. P.


Pethick-Lawrence, F. W.
Shillaker, J. F.
Walkden, A. G.


Phillips, Dr. Marion
Shinwell, E.
Walker, J.


Picton-Turbervill, Edith
Short, Alfred (Wednesbury)
Watkins, F. C.


Pole, Major D. G.
Simmons, C. J.
Watson, W. M. (Dunfermilne).


Potts, John S.
Sinclair, Sir A. (Caithness)
Watts-Morgan, Lt.-Col. D. (Rhondda)


Price, M. P.
Sinkinson, George
Wellock, Wilfred


Pybus, Percy John
Smith, Alfred (Sunderland)
Welsh, James (Paisley)


Quibell, D. F. K.
Smith, Ben (Bermondsey, Rotherhithe)
Welsh, James C. (Coatbridge)


Ramsay, T. B. Wilson
Smith, Frank (Nuneaton)
Westwood, Joseph


Raynes, W. R.
Smith, Rennie (Penistone)
Whiteley, Wilfrid (Birm., Ladywood)


Richardson, R. (Houghton-le-Spring)
Smith, Tom (Pontefract)
Whiteley, William (Blaydon)


Riley, Ben (Dewsbury)
Smith, W. R. (Norwich)
Williams, David (Swansea, East)


Riley, F. F. (Stockton-on-Tees)
Snell, Harry
Williams, T. (York, Don Valley)


Ritson, J.
Snowden, Rt. Hon. Philip
Wilson, J. (Oldham)


Roberts, Rt. Hon. F. O. (W. Bromwich)
Snowden, Thomas (Accrington)
Wilson R. J. (Jarrow)


Romeril, H. G.
Sorenson, R.
Wise, E. F.


Rosbotham, D. S. T.
Stamford, Thomas W.
Young, R. S. (Islington, North)


Rowson, Guy
Strachey, E. J. St. Loe



Russell, Richard John (Eddisbury)
Strauss, G. R.
TELLERS FOR THE NOES.—


Salter, Dr. Alfred
Sullivan, J.
Mr. Paling and Mr. Charles


Samuel, Rt. Hon. Sir H. (Darwen)
Sutton, J. E.
Edwards.


Resolution agreed to.

PROVISION IN THE CASE OF DEFICIT IN ANY YEAR FOR REDEMPTION IN THE NEXT YEAR OF A CORRESPONDING AMOUNT OF DEBT.

Resolution reported
That, if it appears by the account of the public income and expenditure of the United Kingdom prepared under section four of the Sinking Fund Act, 1875, for the financial year ending the thirty-first day of March, nineteen hundred and thirty-one, or for any subsequent financial year, that expenditure was in excess of income, a sum equal to the excess shall in the next financial year be charged on and issued out of the Consolidated Fund and applied in the same manner as the New Sinking Fund (1928).

Bill ordered to be brought in upon the said Resolutions and upon the Resolutions reported from the Committee of Ways and Means on the 30th day of April and agreed to by the House on that day, and on the 1st day of May by the Chairman of Ways and Means, the Chancellor of the Exchequer and Mr. Pethick-Lawrence.

FINANCE BILL.

"to grant certain duties of Customs and Inland Revenue (including Excise), to alter other duties, and to amend the Law relating to Customs and Inland Revenue
(including Excise) and the National Debt, and to make further provision in connection with finance," presented accordingly, and read the First time; to be read a Second time To-morrow, and to be printed. [Bill 184.]

HOUSING (SCOTLAND) [EXPENSES].

Resolution reported,
That for the purposes of any Act of the present Session to make further and better provision with respect to the clearance or improvement of unhealthy areas, the repair, demolition, or closing of insanitary houses, and the housing of persons of the working classes in Scotland, to amend the Housing (Scotland) Act, 1925, the Housing, etc., Act, 1923, the Housing (Financial Provisions) Act, 1924, and other enactments relating to housing subsidies and for purposes connected with the matters aforesaid (hereinafter referred to as "the said Act") it is expedient to authorise the payment out of moneys provided by Parliament—

(1) of annual contributions towards any expenses incurred by local authorities in connection with any action taken by them under the said Act for dealing with clearance or improvement areas or for the demolition or closing of insanitary houses, and in connection with the provision and maintenance of the housing accommodation rendered necessary by any action so taken or action taken under paragraph (d) of Sub-section (1) of Section forty-three of the Housing (Scotland) Act, 1925, so, however, that such a contribution shall be payable during a period of forty years only and shall not exceed—

(a) so far as regards persons displaced from houses in a rural area, the sum of
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two pounds fifteen shillings, and so far as regards persons displaced from houses in other areas the sum of two pounds ten shillings, multiplied in either case by the number of persons of the working classes (being persons whose displacement is shown to the satisfaction of the Department of Health for Scotland to have been rendered necessary by such action as aforesaid), for whom accommodation has, with the approval of the Department, been rendered available in new houses; and
(b) in any case where the local authority purchase under the said Act or pay compensation under the said Act in respect of dwelling houses or other premises which are neither unfit for human habitation nor injurious or dangerous to health, and which are included in a clearance Order or compulsory purchase Order by reason only of forming part of the same buildings as dwelling houses which are unfit for human habitation or injurious or dangerous to health, an additional sum of fifteen shillings, multiplied by the number of persons displaced from the clearance or improvement area, but such additional sum shall not exceed the annual sum required over a period of forty years to meet one-half of the total sum representing—

(i) the compensation paid in respect of the demolition of such, if any, of the said dwelling houses or other premises as were included in the clearance Order; and
(ii) the purchase price or compensation paid in respect of the acquisition of the remainder of the said dwelling houses or other premises under deduction of the sum which, in the opinion of the Department, would have been payable by the authority as compensation in respect of the said dwelling houses or other premises had the said dwelling houses and premises been specified in the compulsory purchase Order as injurious or dangerous to health;

(2) of annual contributions towards the provision of hostels to meet the needs of single persons, so, however, that such a contribution shall not exceed the sum per person ascertained in accordance with paragraph (1) hereof, multiplied by a number determined by the Department of Health for Scotland as being the number of persons for whom the hostel provides housing accommodation;
(3) of any additional sums which may become payable under previous enactments relating to housing subsidies by reason of any provision of the said Act which—

(a) amends the definition of rural area in the Housing (Financial Provisions) Act, 1924; or
(b) provides that, as from the sixteenth day of May, nineteen hundred and thirty, the amount of an annual payment to be made to a local authority under Section five of the Housing, Town Planning, etc. (Scotland) Act, 1919, or
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Sub-section (3) of Section one, Section six, or Section twenty-three of the Housing, etc., Act, 1923, may, instead of being determined on the basis of the estimated annual loss or estimated average annual loss resulting from the carrying out of the scheme in respect of which the payment is to be made, be determined either on the basis of the actual loss so resulting, or on the basis of the estimated annual loss or estimated average annual loss so resulting, or on the basis of actual income or expenditure as respects some items required to be brought into account, and on the basis of estimated income or expenditure as respects other such items;

(4) of any expenses incurred by the Department of Health for Scotland under the said Act in exercising any powers of a local authority, subject, however, to the recovery of those expenses from the local authority in the manner provided by the said Act."

Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

The SECRETARY of STATE for SCOTLAND (Mr. William Adamson)rose—

HON. MEMBERS: Agreed.

Major ELLIOT: The Secretary of State for Scotland was standing at the Box, and I am more than willing to give place to him, if he is prepared, as he seemed anxious to do, to make a statement. It will not take us long to deal with this Resolution.

Mr. W. ADAMSON: In the Committee stage and since, a number of criticisms have been directed against the finance of the Bill, based upon figures comparing the 50 per cent. grant which is being paid in respect of previous schemes with the amount of grant payable under the Bill ascertained by taking the number of persons displaced under such schemes and multiplying it by £2 10s. That is a fallacious comparison. The present grant represents 50 per cent. of the deficit on each scheme for housing the people, and the chief factor in the production of these deficits has been the cost of house building, which has been steadily falling for a number of years. Since 1926, the fall has been on the average for the whole of Scotland at least 20 per cent. Moreover, the cost of house building is still falling. It is obvious that if the previous schemes had been carried out at current prices the deficits on them would be much less than
they are, and the local authorities would, of course, receive a correspondingly lower 50 per cent. grant. The only true comparison is as between one half of the deficit on a scheme at present-day prices, and the amount of the grant offered under the Bill.
11.0 p.m.
Other, though less serious, errors have been discovered in the comparative statements submitted by local authority officials, arising out of the assumption that the 50 per cent. grant at present receivable by the local authorities will be continued at the present amount for a period of 60 years, whereas it will be adjusted from time to time as the deficit diminishes. Two important factors which will lead to a decrease in the deficit are as follows: (1), the loans covering the expenditure are not all for a period of 60 years. For example, loans in respect of streets and sewers are for a period of only 20 and 30 years respectively. When these loans are paid off the deficit will be reduced by the amount of the annual loan charges thereon. Secondly, the present 50 per cent. grant includes expenditure on the acquisition of slum property, including sites. Some of these sites will eventually be disposed of and the proceeds will be credited to the slum clearance scheme, thereby reducing the deficit on the scheme. On a strict comparison there is no doubt that the financial terms offered by the Bill are much more generous to the local authorities than the present 50 per cent. grant. On a scheme which contains an average of four persons per family, which is slightly less than the average in the schemes hitherto submitted, it is estimated that as regards rehousing the grant in the Bill will cover nearly 66 per cent. of the deficit. With an average of only 3¾ persons per family, the grant will represent about 60 per cent. of the deficit. Broadly speaking, the larger the average number of persons per family the greater will be the percentage of the deficit borne by the grant. I believe that, after these explanations, my Scottish colleagues will now agree to give me the Report stage of this Bill.

Major ELLIOT: The right hon. Gentleman the Secretary of State has certainly given some interesting figures. Members of the House have received com-
munications from great Scottish local authorities which show uneasiness about the finance of the Bill, and it will be our duty to examine the finance closer when the Bill is in Committee upstairs. It is quite true that the Secretary of State has brought forward facts analysing the statements by the local authorities, but the Town Clerk and City Chamberlain of Edinburgh gave us a statement on 3rd May in which they went at some length into all the figures and dealt with this specific point which the Secretary of State mentions as to the considerable falling in which will take place in certain charges after the thirty-first year. They come to this rather striking conclusion.
The reporters are definitely of opinion that the new financial proposals, so far as Edinburgh is concerned, will not have the effect of achieving the avowed purposes of the Government, namely of conferring an increased measure of assistance on the local authority.
That is a statement of which we are bound to take note, and we are also bound to take note of the statement by the City Chamberlain of Dundee, who says:
Generally speaking, the proposals as presently framed in the Bill are considerably less favourable to the local authority than are the financial proposals of the 1923 Act, since in many cases the grant will fall short of the amount required to make a clean sweep of the worst places.
I am sure the right hon. Gentleman the Secretary of State will not blame us for bringing forward these statements, of which we are bound to take note. I do not hope to persuade the right hon. Gentleman to withdraw this Resolution and to lay an entirely new one, giving more generous terms, but, examine these proposals as we may in Committee, we shall find ourselves very tightly bound by the Resolution which we are now asked to pass. In view of the uneasiness of local authorities and their comparison of these proposals with the scheme in the Act of 1923, I ask the right hon. Gentleman whether, when we reach in Committee the Clause of the Bill repealing the 1923 Act slum clearance provisions, he will consider an Amendment which I hope to move to omit that repeal and to leave the provisions of the 1923 Act available as one of the options open to the local authorities. If the right hon. Gentleman accedes to that Amendment, it cannot do any harm and will, I think, do good in
reassuring local authorities and in providing, further, for that continuity which has been maintained now for several years.
The 1923 Act is still functioning, and slum clearance is proceeding under it to the extent of one-fifth of all the houses under construction in Scotland. A Statute which is producing slum clearance to that extent, is one which we ought not wantonly to repeal, and I ask the right hon. Gentleman to consider whether he cannot leave it on the Statute Book in addition to the Act which he hopes to put there. He can thereby provide us with a trace horse to take us over the hill which is such a serious obstacle in the way of the improvement of the health of the people in Scotland. We have no great hope of getting the Secretary of State to withdraw this Resolution, and still less of getting the Chancellor of the Exchequer to withdraw it. When the Chancellor of the Exchequer was defending the extraordinarily wide Resolution which we were discussing a short time ago, I could not help wishing that he would look at the extraordinarily tight and detailed nature of this Financial Resolution: If we could reverse the position, and get the Chancellor of the Exchequer to accept, for himself, a Resolution as tight as this, while giving us a Resolution on Scottish housing as loose as that which we were discussing previously, it would mean both a better Budget and more progress with housing in Scotland. Many of these financial provisions require close examination and criticism, but we wish to proceed with the Bill. We wish to get any additional assistance which the Measure can give to sweep away the slums of Scotland as quickly as possible and I am sure that, on this side of the House, we shall do our utmost to ensure the rapid passage of this Resolution.

Mr. DUNCAN MILLAR: I agree that the House is entitled to look carefully into the details of this Resolution, because this is the first opportunity we have had of discussing these financial provisions, since ascertaining the views of the Scottish local authorities, and it is exceedingly important that we should be able to voice the feelings of our constituents and of the local authorities on this matter.
I should like to draw attention to the fact that at a conference of local authorities on the 3rd instant, where a very large number of Scottish local authorities were represented, there was, as far as I can gather, serious dissatisfaction expressed with the terms of the financial proposals. My hon. Friend has referred to the case of Edinburgh and Dundee, but I think I can also add that in the report of the proceedings of that conference the views of the city of Glasgow also were given, and in no case was general assent given to the proposals. I think the right hon. Gentleman is rather exaggerating the case he is putting forward to indicate that the proposals in this Resolution are so very much better than the existing provisions under which slum clearance is carried out. In the figures he mentioned he took an average of four persons per family, and said the proportion of deficit to be borne by the Stare was something like 66 per cent., but when you deal with particular districts, that average does not prevail. I have here the report by the City Chamberlain of Dundee and it will be found that the estimated population comes out at 3.7 per house.
Considerable difficulties are going to arise in connection with the proposals put forward under the operation of the unit grant. It is not certain under this Financial Resolution whether we are dealing with persons actually displaced or those who are re-housed, and there is a considerable difference between the two cases. It does not follow at all that if you displace a number of persons, you will re-house the same persons in the new houses. In Dundee it has been found that a very large proportion of those displaced under slum-clearance schemes will not be re-housed under the proposals of the new scheme. In the Blue Mountain housing scheme it was found that 72 of the houses which were intended to re-house people had to be transferred to the slum clearance account of the 1923 Act. We have had several experiences of slum clearance in Edinburgh, Dundee and other places, where it is found that under the proposals now put forward the situation would be much worse than under the older scheme.
Figures are given in the report of the Dundee City Chamberlain of one of the
slum-clearance schemes which indicate that the figures would be substantially worse under the Government's present proposals. We want to know more about this. The local authorities are naturally very much concerned. I should not be in order in developing the question of a percentage grant, but I am entitled to point out that you are dealing here with a unit grant which I think the hon. and gallant Member for Kelvingrove (Major Elliot) is not correct in describing as a block grant, although it is open to some of the criticisms that we have made of the old block grant, because it lays on the local authority unknown burdens which they may have to face. The burden on local rates is placed at £4 10s., but it is clear that it may have to be exceeded in some cases, and who is going to pay it?
I would remind the House that, under the derating proposals of the late Government, the area of rating is going to be very much restricted, and that the additional burden will be borne on a very much narrower area. In other words, the other ratepayers, who are not going to benefit from reduced rents or relief of rates, may be faced with this additional burden, and the view of the local authorities is that they ought to be safeguarded against any additional burden beyond the figure which has been indicated, namely, £4 10s. Sir William White summed up the decisions of the conference, namely, that the burden of the local authorities should be restricted to £4 10s. per house per annum, and that the State should be responsible for the deficit which might ensue; or, alternatively, they suggested that they should get a percentage grant of at least 75 per cent.
I am certain that I am voicing a feeling which is very strong throughout Scotland to-day in saying that, under the proposals of this Financial Resolution, an unknown burden will yet be placed upon local authorities. The conditions have not yet been fully explored or explained. There are many circumstances which have not yet been taken into account. What is the basis of the right hon. Gentleman's estimate? Has he taken figures for definite slum-clearance schemes all over the country? Is it not the case that, when he has to deal with these schemes, in which there is a very large
proportion of one-roomed or two-roomed houses, he will find his average very much down? Is he not taking his average on a basis which will show a larger proportion of individuals per family than will be found in many normal cases throughout the country? I am satisfied that, if the local authorities had been consulted earlier—and it is very much to be regretted that they were not more fully consulted—it would have been found that they would have much preferred a definite undertaking that they were going to get a percentage grant. This Financial Resolution leaves an unknown responsibility on their shoulders.
I hope that the right hon. Gentleman will not take the view that we are restricted by what has taken place in regard to the English Financial Resolution. The Under-Secretary of State, at this conference, stated, I understand, that they were bound by what had taken place in England, that the Financial Resolution had been carried in the House of Commons, that it was binding upon them, that it had to be considered in the light of what the English local authorities were prepared to take. I entirely differ from that point of view, because we are dealing in Scotland with entirely different conditions, and no one knows that better than the right hon. Gentleman. A very definite distinction has always been drawn with regard to the case of Scottish housing. It is well understood that the average number of persons per house in Scotland, where there are many two-roomed houses, is considerably lower than that in England. In Dundee the figure is 3.7. Again, in Scotland you have a different rating incidence altogether, and, in fixing rents in Scotland, account has to be taken of the fact that the owner's rates have also to be considered, whereas that question does not arise in England. In the third place, we have higher structural costs, owing to the climatic conditions. Therefore, we have an entirely different case to make.
When the right hon. Gentleman asks us to assist him in going to the Treasury, we say that we are willing to give him all the backing we possibly can, and that he should go with his hands perfectly free from any restriction laid upon him by what has taken place in England, and should make his own case. I feel that
there is here a case to be reconsidered. The hon. and gallant Gentleman the Member for Kelvingrove has made one or two suggestions as to how the matter can be dealt with. I should prefer that the Resolution should be withdrawn to give effect to the views of the Scottish local authorities, but I am not prepared to put any obstacle in the way of getting forward with our slum clearance schemes. I suggest that we should get an undertaking that the matter should be reconsidered in the light of further experience that may be gained and that we shall not be regarded as having bound ourselves definitely at this stage to accept the proposals that the Government put forward, but that we shall be in a position to come back and ask for something better.

Mr. SCRYMGEOUR: I should like to put in a plea in support of what the hon. and gallant Gentleman has said concerning our own constituencies as one of the cases with which the Government, and particularly the Under-Secretary of State, is familiar. It is certainly a pity that there have not been earlier consultations with the local authorities to enable them to have submitted fully the difficulties that pertain to such an industrial centre as Dundee. That position, we know, in dealing with a former Bill, created a considerable amount of difficulty. Not only is there Dundee but Edinburgh and Greenock were involved on that former occasion and it was found to be essential to make provision for the smaller class of dwelling houses. Unfortunately the whole trend of this Bill is directed to providing larger houses. We quite agree on the desirability of providing larger houses, indeed we can go further and say we are in favour of having larger incomes, but the difficulty is to get them, and you cannot very well get houses without paying for them. The people in Dundee, at any rate, have very small provision in the matter of wages and they are obliged to find a smaller class of house. The plan adopted in this Bill is an arrangement whereby the onus of carrying out the plan of differentiation of rent is thrown upon the local authority. That will certainly be attended with very serious difficulty. But when you take the fact that £7 10s. is given as the allow-
ance for a two-roomed house, there are 1½ units allowed for each room and at that allowance we find by actual experience in the working out of one of these large clearances that have already taken place, it is established beyond any chance of doubt that there would be a very serious loss to local authorities, and most strongly have they urged, and particularly the Labour members of the council, this plea within the past week.
This further point was also raised by the hon. and gallant Gentleman the Member for Kelvingrove as to whether the Government intended to repeal the 1923 Act. It would only be fair to local authorities that the Act should be allowed still to operate. If they are satisfied that they can get better terms by that Act, I cannot see why the Government should repeal it. It is certainly most necessary that one should urge upon the Government to give special consideration to these centres. I believe that a meeting of Scottish Members was held in the Scottish Office during the past week. It happened to be on the same day as a conference was called by the local authorities. I can only say that as one who attends meetings very regularly I was not invited—[Interruption]. If my hon. Friend has anything to say, let him say it. The Parliamentary representatives have an opportunity of considering subsidiary matters at these meetings, but on this occasion it so happened that it was the Scottish Housing Bill which Members were invited to consider. It was not a very fair handling of the question that certain Members who are Scottish Labour Members should not have been invited. It was reported in the Press and stated by a colleague to be a meeting of Scottish Members. [Interruption.] I expect it was a meeting attended by Labour party Members, and I can understand the difficulty. The party is united sometimes. You have to swear by the Labour party or it will not do. Fortunately, some of our own crowd are not likely to proceed on those lines. I am dealing with the interests of my constituency. The Labour Members of the Dundee Town Council have protested against the action of the Labour Government. I submit that the Government ought certainly to take into consideration the industrial centres where the economic conditions are such that it is imperative to make provision
on lines that will meet the ability of those people to pay the rent. One idea, apparently, is to have a differentiation in regard to rents on the basis of ability to pay. The local authority of Dundee do not want to pay more than £4 10s. They consider that they are contributing a fair proportion of local expenditure towards unemployment. Unemployment is a national question and it is not fair to throw the onus of providing a substantial share of the finances of a scheme on to the local authority. We want to see what can be done to get better terms for those centres which are dealing with the matter.

Major Sir ARCHIBALD SINCLAIR: I would not have intervened at this late hour had I not a matter of great importance to bring to the notice of the House with regard to the position of a large number of people in Scotland who live in small burghs in rural areas. This Bill will not apply to the position in these burghs. The Secretary of State has given some interesting statistics comparing the advantages given under this Bill with the advantages given under other Acts of Parliament to people in the big cities. It is my complaint not only against this Government, but against previous Governments that they have not faced up to this very important and increasingly urgent problem as to what is to be done to these people who live in the small burghs with a very low rateable valuation. I am talking of a valuation where a penny rate yields from £55 and £60 up to £80 or £100.
In these small burghs building is going on under the Chamberlain and Wheatley Acts, but it is not meeting the case of the poor people who are living in terrible slum conditions. Their conditions are getting worse. They are not being moved into the Wheatley and Chamberlain houses, which are being occupied by people who come into the burghs from the country. It is sometimes said that the people some of whom live in these houses make room for people from the slums, but it is not working out in that way. In one burgh which I know, a very small percentage of people who have gone into Wheatley and Chamberlain houses have left habitable houses in that burgh. I mentioned this point in the Debate on Second Reading, and the Under-Secretary said:
Even in those burghs which have a very small return for a penny rate, under the provisions of this Bill, except for two-apartment houses, it will be possible for the small burgh to proceed with slum clearance schemes and to let those houses at rents which are substantially the same as the rents the people are paying now."—[OFFICIAL REPORT, 10th April, 1930; cols. 2465–6, Vol. 237.]
The hon. Gentleman is really misinformed. Most people are paying in the small burgh to which I personally belong an average rent of less than £4. We cannot build at that figure under this Bill to meet the requirements of these people. We are faced with the situation of having to provide for poor fishermen, share fishermen owning their own boats, who are not wage-earners and who have not been able to afford more than this rent; and I contend that we must do something probably on the lines of the Addison scheme. When I referred to the places where the yield of a penny rate was only £55, the Under-Secretary said:
The question of houses in small burghs where a penny rate produces a very small sum of money is a problem which has many repercussions, and I trust that my hon. Friend will not push me too far, lest he pushes these houses out of the control of the local authority altogether and into the hands of the counties."—[OFFICIAL REPORT, 10th April, 1930; col. 2465, Vol. 237.]
I know of a county where the yield of a penny rate produces only £280 for all purposes, and they are piling up considerable liability for the improvement of rural housing under the Housing (Rural Workers) Act. They are going to be rightly urged to make the best use of this Bill, but what will they have left with which to help the burghs, if the burghs are forced under their jurisdiction? There is really no hope on that line.
The fact is that we are not at the present building for the poor people who are living in these wretched conditions in which there are serious risks. What would happen in some of these slum areas in the small burghs if there were an epidemic I tremble to think, and yet nothing is being done to avert that risk. Nothing much can be done under this Bill, and nothing could be done by the Acts passed by other Governments. It is time that we faced up to the position. There has been so consultation with the representatives of the small burghs. I have not been invited to the meeting which has been held at the Scottish Office.

Mr. W. ADAMSONindicated dissent.

Sir A. SINCLAIR: Not to the one on housing.

The UNDER-SECRETARY of STATE for SCOTLAND (Mr. T. Johnston): Surely there has been no issue, housing or anything else, which has been down for consideration, on which the hon. and gallant Member and his friends were not present?

Sir A. SINCLAIR: The Housing Bill was not introduced.

Mr. JOHNSTON: I did not say housing; I said "or anything else."

Sir A. SINCLAIR: We were confined to administration. Legislation was ruled out. I am not making any complaint, and I hope the Under-Secretary will not think that I am making an attack upon him or his Government. This is a problem which no Government has yet faced and I am appealing to him to face up to this question and bring these people into consultation upon this urgent problem. He really has been misinformed when he says:
There are probably no two burghs where the conditions are alike, and it is very difficult to set out regulations which will apply to every burgh, but as far as our advisers can tell us there is no burgh in Scotland whose financial circumstances will not benefit materially by putting into operation the provisions of this slum clearance Bill."—[OFFICIAL REPORT, 10th April, 1930; col. 2466, Vol. 237.]
How can the financial circumstances of a burgh where a penny rate only brings in £55 and where the average rent is only £4 benefit under this scheme? Of course conditions are different. That is one of the difficulties of the case. The Government have not discriminated between the varying conditions which exist in the districts in Scotland, and I ask that they should take them into consideration and see whether it is not possible to vary the Regulations issued by the Department. These local authorities do their best. I hope they will work this Bill for all it is worth; I shall give it my support. Do not let us put all the blame on the local authorities, as we are apt to do, when Acts which are passed here are not a success. They are asked to make bricks and we sometimes supply them with very little straw. If we think that these small burghs will be able to face the problem by this Bill we are
deluding ourselves. The position is serious. The information with which the Secretary of State has been supplied is not full or comprehensive, and it is not accurate. I ask him to hold some form of quick inquiry into this matter, bring the conveners of the housing committees of the small burghs into consultation, give them an opportunity of explaining their difficulties, their special problems, and, if possible, vary the Regulations of the Department to suit the differing conditions which exist. Then I hope it will be possible for these small burghs to face up to their difficulties. I support the Resolution and I support the Bill, and I will do my little bit in any way I can to make it effective.

Mr. WOMERSLEY: We have heard a great deal about what Dundee requires for their housing scheme. I would like to know what Aberdeen would like.

Mr. JOHNSTON: I trust that at this late hour I shall not be expected to go in elaborate detail into the many financial points which have been raised by hon. Members, particularly as it will be possible for us on the Committee stage to have very full discussion of those points. But I would like to reply generally to the accusations which have been made that by three or four speakers to the effect that the terms offered in this Bill are inadequate to induce local authorities to proceed drastically with slum clearance schemes. The hon. and gallant Member who addressed the House so eloquently on the necessities of impoverished small burghs and rural areas does not, I am sure, expect that a Bill of this kind can deal adequately with the great problem of the economic impoverishment of many of those distant areas. It is a tremendous problem to build houses and let them at rents which the people can pay in districts where the wages are so low as barely to provide for the minimum standard of physical existence. It is a problem for the Department of Health to decide how far it is possible to put the screw on many of these small burghs and local authorities in distant areas where, as the hon. and gallant Member said, the yield of a penny rate may be only £50 or £55.
The hon. and gallant Member asks me what we are going to do for areas where the people are paying only £4 rent at the present time. That is a problem
which must be tackled by the House in another direction. You cannot level up the conditions between an impoverished fishing area or area in the Outer Highlands and a prosperous county town by a side wind, by a Clause in a housing Bill. We have to face up in other directions to the problem of equalising conditions in Scotland so that the inhabitants everywhere will be able to get at least a minimum standard of life. I was asked whether the Bill did anything for the small burghs. I said on the Committee stage that it does something for the small burghs. I have spent all my days in a small burgh. The conditions of a small burgh are what I know best, and if the hon. and gallant Member will take the case of a small burgh and a three-apartment house, with the six persons who may be admitted into that house, he will find he can get a State grant of £15 for the rehousing of that family. Surely, then, the small burghs can begin to consider whether they cannot decant the larger families into these new houses, seeing that they will get a grant of £15 in such cases.
While the difficulties may be such that it will not be possible to provide proper housing accommodation, that is no reason why local authorities cannot play a larger part in providing more sanitary houses when such large grants as I have described are possible under the Bill. Reference has been made to the schemes of the larger local authorities, and Glasgow and other local authorities have expressed considerable apprehension as to whether they were going to be better off under the financial terms of this Bill than on the present 50 per cent. grant basis. The Health Department has examined every scheme from every local authority including Glasgow and in no case is the local authority worse off than they would be on the 50–50 basis, and in many cases they would be better off.
I have been asked whether local authorities could have the option of having the 50–50 basis if they preferred it and I am authorised by the Secretary of State for Scotland to say that we shall consider that suggestion in all its aspects and get the best advice we can between now and the Report stage. I am convinced that when the local authorities understand the provisions of this Bill there will not be any
desire whatever to go back to the 50–50 basis. In the case of Edinburgh I have a copy of the report which has been referred to and it is inevitable that there would be very serious losses if a large sum was paid for the church amounting to £4,000 or £8,000. That would not be permitted under the 50–50 arrangement, because it would not rank for the grant. I simply give that as an illustration, and it is not fair to make comparisons of that kind.
The hon. Member for Dundee (Mr. Scrymgeour) said that the Corporation had been exceedingly apprehensive as to the working of this Measure. If the Corporation of Dundee are trying to build houses for these single-person families and are only getting a £2 10s. grant for those houses, there will be considerable financial difficulties. I can assure hon. Members that these schemes have been examined further by the experts of the Department, and under the scheme for housing single person and two person families, Dundee will get 58 per cent. of its loss by way of State grants under our Bill, as against 50 per cent. under the existing law.

Mr. SCRYMGEOUR: Has the hon. Gentleman compared the findings in the report with the assessors' report in regard to the variations between the worst cases and the best?

Mr. JOHNSTON: What I did was to invite the representatives of Dundee to get in touch with the experts at Edinburgh and to go over the details of the estimates, and they actually find that even under the worst construction which can be put on this Bill they will get 58 per cent.
One word about the Calton scheme. It is the largest small families scheme that has been undertaken at one bite by any local authority. I have had the figures examined and re-examined, and on the corporation's own figures, on the fifty-fifty basis under the present law, the State grant amounts to £11,160—that is, half the annual loss. Under our Bill the amount is £11,673, so that they will be £513 better off than they now are. In addition to that £513, they are to get an undetermined sum by way of compensation for disturbance, whereas the figures for compensation are included in the State grant on the present fifty-fifty
basis. Taking the circumstances at their worst, every local authority which has a scheme can have it examined, and will find they are going to be better off financially under the terms of this Bill than they were on the fifty-fifty basis. Take cases such as Lanarkshire or Glasgow, or wherever there is a considerable proportion of single-unit families or two-unit families, and you find there is a difficulty. We all know that it is almost impossible to build a house for a single old man or a single old woman, or an old couple without a family, and let it at anything like an economic rent with a unit basis of £2 10s. There is nothing in this Bill to compel a local authority to decant these particular people out of the slums into the new slum clearance houses. You can take the single-unit families or the double-unit families and decant the large or overcrowded families in other improvement areas, get the bigger grants and put the people into the new houses. You will then have vacant houses for your single or double unit families.

Mr. TRAIN: Where are the new houses to be found for the large families? Under the Wheatley scheme?

Mr. JOHNSTON: We are going to build them. Let us be clear about it.

Mr. TRAIN: That is what we want.

Mr. JOHNSTON: If we take the overcrowded family, the large family of, say, six or eight people, out of an improvement area we get the grant; but the local authority must build the new houses before it gets the grant. It builds the houses and gets the grant in respect of the large family and it has then a house vacant into which it can put the two unit family or the one unit family.

Mr. TRAIN: In a slum?

Mr. JOHNSTON: I said in an improvement area.

Mr. SKELTON: I understand the argument about decanting the large family and getting the grant, but where is to be found the house into which the one or two unit family is to be put? It is living in a district which is a slum.

Mr. JOHNSTON: The house into which we put the one or two unit family is the house from which we take the overcrowded family.

Mr. SKELTON: In a slum?

Mr. JOHNSTON: In an improvement area. An improvement area is not a slum.

Mr. SKELTON: Then it does not apply to slums?

Mr. JOHNSTON: If you build a new house for a large family which you take from a smaller house, you have vacant a house into which you can decant one or two unit families.

Sir PATRICK FORD: Then does the improvement area really mean an improvement in regard to the number of people you house and not an improvement in the structure of the house? You are not improving the house, but you are improving matters by not letting the house be overcrowded? Is that to be the improvement area?

Mr. JOHNSTON: That is only part of the meaning of an improvement area. I am only dealing with overcrowding at the moment. I am only seeking to show that this is one method by which the local authority can get rid of part of its liability for the housing of its smaller unit families, which might bring down its average grant and thereby create less of a loss.

Major ELLIOT: In the case of the family that moves into the smaller house there is no grant?

Mr. JOHNSTON: The family which you move from a clearance area into a less overcrowded house is a family for which you cannot get a grant. You cannot get a grant for both. It is the large family for which you build a new house and the small one you take from a slum area. Whichever is the family that is decanted to the new house is the family for which you get the grant.

Sir ROBERT HORNE: You are shifting the smaller families to larger houses. How is the rent arranged if there is no grant? You shift the one or two-unit family to the house from which you have removed the larger family, and presumably, since there is no grant for the second shift, there is a larger rent for the single or two-unit family. How is that arranged?

Mr. JOHNSTON: I can assure the right hon. Gentleman that there is provision
in the Bill whereby the rents may be equalised if taken over the whole scheme. It is rather a difficult and complicated matter to explain at this hour.

Sir R. HORNE: I do not want the hon. Gentleman to go into it as long as there is a provision to meet the point.

Mr. JOHNSTON: There is a provision to meet the point. There is another point to which I wish to draw attention. A difficulty undoubtedly arises over what you are to do with the single person and two-person families; but there is nothing to prevent the local authority dealing with this difficulty under what is called the Wheatley scheme basis.

Major ELLIOT: You would allow in that case a larger proportion of two-room houses for these families, because it would be obviously unnecessary to have the larger house for a two-unit family?

Mr. JOHNSTON: If we take away overcrowded families from improvement areas, we should be able to deal with some two-person families in that way. Every local authority which chooses to use its powers under this Bill will gain. It may attack the problem of the two-person house through the Wheatley scheme. It may attack it through the method of decanting families into an improvement area, it may attack it by the method of equalising rents, or it may attack it by other means that I need not specify here. I will only say that we are endeavouring to put local authorities which have slum clearance schemes into touch with the actuaries and experts of the housing department in Edinburgh. We are going into every scheme submitted to us, as fully and conclusively as possible, and we believe, that if the House passes a Bill somewhat on the lines on which this Bill has been drafted, subject of course to such Amendments as may be considered proper, it will enable every local authority to deal with some of its urgent housing problems and certain local authorities to deal with the majority of their urgent housing problems. More than that, I am sure my right hon. Friend the Secretary of State for Scotland would not claim for this Bill
but if we can justify that claim I think we shall have deserved well of all who are interested in the improvement of housing.

AIR TRANSPORT (SUBSIDY AGREEMENTS) [MONEY].

Resolution reported,
That it is expedient to authorise the President of the Air Council to agree, with the approval of the Treasury, to pay subsidies to any persons and to furnish facilities for their aircraft, in consideration of those persons maintaining in accordance with the agreement a regular service for the carriage by air of passengers, goods, and mails, and to authorise the payment out of moneys to be provided by Parliament of any sums required by the President for the fulfilment of any such agreement:
Provided that the aggregate amount of the subsidies payable under all such agreements shall not exceed one million pounds in any financial year, and no subsidy shall be payable under any such agreement after the thirty-first day of December, nineteen hundred and forty.

Bill ordered to be brought in upon the said Resolution by Mr. Montague and Mr. Pethick-Lawrence.

AIR TRANSPORT (SUBSIDY AGREEMENTS) BILL,

"to authorise the President of the Air Council to pay subsidies and furnish facilities to persons maintaining regular services for the carriage by air of passengers, goods, and mails," presented accordingly, and read the First time; to be read a Second time upon Monday next, and to be printed. [Bill 185.]

The remaining Orders were read, and postponed.

It being after half-past Eleven of the Clock upon Tuesday evening, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Ten Minutes after Twelve o'Clock.